Pensioners will face lower increases in their payments in three years time as the Abbott Government grapples with the drain on the Budget caused by surging numbers of retirees.
While age pensioners will be spared any immediate hit to their hip pocket, wealthier self-funded retirees will lose the Seniors Supplement payment within weeks, worth $876 a year for singles and $1320 for couples.
With Tony Abbott promising in the run-up to the election there would be no cuts to the pension, the Government has been forced to delay a range of proposed changes until 2017, potentially making pension payments a campaign issue at the poll due in late 2016.
As expected, the Government will move to a lower indexation rate for the twice-yearly pension rises. The age, veterans, disability support pensions and carers payment will be indexed to the inflation rate from September 2017 instead of male total weekly earnings. The parenting payment for singles will be linked to inflation from this July.
The measure will save taxpayers $449 million over five years.
The change will mean the fortnightly increase for single pensioners will be about $2.94 and for couples $4.40 lower than it would otherwise have been in 2017.
In another change, the deeming thresholds for income pensioners can earn from investments without affecting their payment will be lowered.
The threshold will fall from $46,600 to $30,000 for singles and $77,400 to $50,000 a couple, a move which will hit 530,000 pensioners.
The income and assets tests used to determine eligibility for a range of welfare payments will also be frozen for three years in two tranches.
The pension cut-offs will be frozen for three years from July 1, 2017, when some pensioners who go over these thresholds will forgo an increase in their payment.
But the eligibility thresholds for Family Tax Benefits, Child Care Benefit and Rebate, Newstart, Parenting Payments and Youth Allowance will be frozen from July, saving $1.5 billion over four years.
Self-funded retirees who receive the Commonwealth Seniors Health Care Card will also face a big hit.
About 290,000 cardholders, as well as 26,000 war veterans and their spouses with a Gold Card, will lose the Seniors Supplement after the final payment is made next month, saving $1.1 billion over five years.
From January, superannuation income will also be included when calculating eligibility for new recipients for the card, affecting about 26,000 people. Existing superannuation income streams will be grandfathered from the changes.
However, about 20,000 extra people will qualify for the card - which gives access to discounted medicines and medical services - because of the Government's promise to index the eligibility thresholds from September.
Unemployed young people will face new demands to "earn or learn". Jobseekers aged under 30 will have to wait six months and participate in job search activities or training or study before they can apply for the dole.
After that, they will be forced to enrol in a Work for the Dole program but after six months Newstart stops being paid. They will have to wait another six months before they can go back on the dole.
As part of the drive to lift workplace participation, about 28,000 disability pensioners aged under 35 and capable of doing at least eight hours work a week will have to be engaged in compulsory activities to help them find a job, such as work experience or Work for the Dole, or face sanctions.
About 20,000 DSP recipients aged under 35 with minor disabilities will have their eligibility reassessed, along with 5000 new recipients.