Treasurer Joe Hockey is looking at pensions for savings.

The rate at which all pensions - including those for the elderly and carers - is increased may be slowed as the Federal Government attempts to slash welfare spending.

It is understood the Government, apart from a probable lift in the age at which people can get the pension, is looking at the indexation rates for a range of payments.

Treasurer Joe Hockey has signalled changing the age pension, revealing its cost will increase 70 per cent over the next decade.

The age pension is already the single biggest expenditure item in the Budget, accounting for one-tenth of all spending.

The age pension is increased at the same rate as a measure of male average weekly earnings. It has consistently grown faster than the consumer price index.

But the Government is considering reducing the indexation rate to CPI, which would bring it in line with the dole.

Such a change would save the Government more than $1 billion a year.

Another option being considered is an increase in the age at which people can access the pension. It is set to rise to 67 by 2023.

Any changes may face trouble getting through the Senate, with Labor signalling yesterday it would not allow the Government to "break any promise" around the age pension.

Shadow families minister Jenny Macklin said Prime Minister Tony Abbott had pledged there would be no changes to pensions just days out from last year's election. "So if . . . there are cuts to pensions or changes to pensions in the upcoming Budget, this will be a complete betrayal by Tony Abbott to 2.3 million age pensioners," she said.

Age Discrimination Commissioner Susan Ryan said lifting the age at which people could get the pension was not a fiscal panacea.

"Raising the pension age will not work if you don't first ensure that people can continue to keep working if they wish or need to, and are capable of doing so," she said. "You will simply be shifting people from the pension to the unemployment benefit and there would be no savings to the Budget."

But Centre for Independent Studies research fellow Jeremy Sammut said the Government should go further.

He said the family home should be included in the age pension asset test and people should take an annuity from their superannuation, effectively barring them from taking a lump sum.

The West Australian

Popular videos

Compare & Save

Our Picks

Compare & Save

More from The West