The age pension and other government payments are set to see the largest increases in almost a decade.

Single age pensioners, disability support pensioners and carer payments will rise by $20.10 per fortnight to $987.60.

For couples, fortnightly age pension payments will increase by $30.20 to $1,488.80.

Social Services Minister Anne Ruston said that 2.1% increase in payments was the "largest increase since 2013".

"This is putting money in the pockets of all Australians who rely on our social security system and, in particular, older Australians," Ms Ruston said.

"It gives us a higher weighting to fuel and transport costs in recognition of their significance to pensioners, which helps ensure the rate of the age pension maintains senior Australians’ purchasing power in the economy."

The increase in payments tends to lag behind the most recent inflation data.

For example, in September 2021 the age pension rose by 1.6% - the same rate as the trimmed mean inflation data for June

The latest pension increase of 2.1% corresponds with the September quarter's increase of 2.1%, despite the December quarter's underlying inflation figure hitting 2.6%.

National Seniors Australia Chief Advocate Ian Henschke said that the increase reflects rising inflation and growing cost of living pressures, but that the government should exempt work income from the income test.

"In Australia, only 2.9% of aged pensioners work compared to 24.8% in New Zealand," Mr Henschke said.

"Pensioners in New Zealand simply work and pay tax without being penalised with the loss of their pension payments.

"Changing the income test would not be a burden on the budget. Quite the opposite. It would boost GDP and government tax revenue. They would go from being seen as a liability to an asset."

Asset test limits have also risen to allow more seniors to access a part pension. 

For single homeowners, the limit has been lifted by $6,750 to $599,750; for couples, the limit has increased by $10,000 to $901,500.

Other government benefits that will see increases include the JobSeeker payment for a single parent without children ($13.20 to $629.50 fortnightly) and the Parenting Payment Single ($18.10 to $874.10).

Rent assistance will also see fortnightly payments rise to $145.80 for singles and $193.62 for families.

"There is a desperate need to particularly focus on Commonwealth Rent Assistance," Mr Henschke said.

"Renters are the most likely to be living in pension poverty."

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