The audit report found that the more than $5 billion of over and underpayments were a result of poor stewardship of the pension system. Photo: Michelle Kroll.
A recent report by the Australian National Audit Office (ANAO) has revealed Services Australia paid incorrect age pension payments totalling more than $5 billion.
The 27 January report says Services Australia underpaid age pensioners about $1.33 billion in the three years to June 2024, while also overpaying others $3.67 billion.
It says almost 75 per cent of the errors centre around undeclared or incorrectly declared assets, and says this high rate of inaccuracies can be attributed to “poor stewardship” of taxpayer resources.
For the same period, the ANAO says Services Australia’s timeliness performance target that requires at least 80 per cent of claims to be completely assessed within 49 days, was not met.
The ANAO says the age pension is the government’s means-tested income support for eligible seniors, and comprises $62.2 billion or about 8.4 per cent of the federal budget.
It says, as of June 2025 there were 2.67 million seniors receiving the age pension, 66.41 per cent of whom receive the full age pension payment rate.
Eligible recipients must be at least 67 years of age; have been an Australian resident for at least 10 years, with at least five having been continuous; and must fulfil a means test where they and their partner’s assets and income fall within legislated thresholds.
Under an appropriated partnership arrangement with the Department of Social Services (DSS), Services Australia administers the age pension program on the department’s behalf.
But the audit found that Services Australia did not fully use the information it had to improve its engagement with seniors, and that its processes to assess and review applicants’ and recipients’ age pension eligibility were only partly effective.
The ANAO said it undertook the audit to provide assurance to the parliament on DSS’ and Services Australia’s administration of the age pension.
The audit looked at whether DSS and Social Services had effective oversight of the age pension, had effective processes for assessing eligibility of applicants and recipients, and effectively communicated and managed its engagement with applicants and recipients.
The audit’s findings included that administration could be improved by tightening processes to verify recipients’ eligibility and pension rates, simplifying and expediting access for applicants and recipients, and reporting on program effectiveness.
It said, during the period of payment errors, complex procedures and limited staffing resulted in seniors waiting an average of 48 days for claims to be processed, while maximum call wait times exceeded one hour on 57.3 per cent of the days during the audit period.
The audit also found that DSS’ oversight of the age pension program was only partly effective, and that it had not promptly addressed issues to ensure that performance standards were met, IT systems supporting Services Australia’s claims assessment operated as intended, and the Department of Veterans’ Affairs (DVA), which administers veterans’ pensions, was set up to administer the program consistent with legislation.
It said that, while DSS evaluated and reported on age pension payment accuracy and the proportion of senior Australians receiving income support, it did not evaluate the program’s impact as required by the Social Security (Administration) Act 1999.
The audit also found that Services Australia’s claims assessment processes were only partly effective, that there were gaps in its verification of assets and income, and that compliance activities and risks associated with the use of IT systems to assess claims limited its ability to correctly assess and confirm age pension eligibility and payment rates.
On top of these findings, it also said Services Australia’s communication and engagement with applicants and recipients was only partly effective, and that it had not fully used the information it collected to address the needs of seniors for simpler claims processes, support with digital technology, and shorter wait times for claims to be completed and phone calls to be answered.
As a result of these findings, the ANAO has recommended that DSS require greater disclosure from Services Australia of limitations and risks associated with payment integrity assurance and IT system issues. It said Services Australia should promptly rectify issues identified in the IT systems, and implement controls to ensure these systems were operating as intended.
It further recommended that DSS addresses payment accuracy and timeliness performance by developing and implementing an approach to ensure that Services Australia’s assessment and compliance processes address risks to payment accuracy and timeliness.
Other recommendations include, that DSS and DVA complete a refresh of the 2013 memorandum of understanding to ensure that DVA is set up to administer the program consistent with legislation; that DSS revises the age pension program logic to support evaluation and reporting to government on program delivery; and that Services Australia develops and implements an approach to verify applicants’ assets and income.
In a report, the Australia Institute’s Senior Economist Matt Grudnoff said overpayments could be as bad as underpayments if they must be paid back.
“People can be presented with debt notices that can seem insurmountable,” he said.
“You would have thought that the government would have learnt from the disgusting Robodebt saga. But again and again, we see the government going back to shoddy automation systems.”
Original Article published by Andrew McLaughlin on PS News.
