* Single pensioners earning more than $38,693 face lower payments

* Couples earning more than $59,228 face lower payments

* Carers to get guaranteed $600 bonus

PENSIONERS will lose their payments faster under changes made by the Federal Government to recoup the $14.2 billion cost of increasing the pension.

As revealed by the Herald in February, the Government has accepted the advice of the Harmer review and lifted the taper rate from 40 cents to 50 cents.

From September 20 this year payments to pensioners will be reduced by 50 cents for each extra dollar of private income above the threshold allowed by the pension income test.

"Changing the income-test taper will mean the full benefit of the pension increase will flow to those with little or no private income while ensuring those with higher incomes receive proportional increases," the Minister for Family and Community Services, Jenny Macklin, said.

The taper rate used to be 50 cents but was decreased by the Howard government as compensation for the introduction of the GST.

Under the new arrangements, the pension will be paid to single people with private income of up to $38,693 instead of $47,444. Couples will be able to earn $59,228 before their pension is affected, down from $72,423.

The changes are likely to be accepted by groups representing pensioners. They have previously said the moves were necessary to recover the cost of increasing the pension and to ensure the pension was paid to people who needed it most.

As part of its plan to encourage people to work for longer, the Federal Government will also introduce a new work bonus for pensioners from September 20.

Only $250 of every $500 earned each fortnight will be assessed as income under the pension test.

The changes are designed to give people an incentive to keep working even though they are receiving a pension.

The changes were made in response to the Harmer review, which found 20 per cent of the people who made submissions said they wanted it to be easier to continue working.

The work bonus will effectively replace the pension bonus scheme that the Harmer review said had failed in its attempt to keep pensioners in the workforce. People already registered with the scheme will be able to continue with it.

After a sustained campaign from welfare and pensioner groups, the Government yesterday confirmed it would increase both the single and couples rate of the pension.

From September 20 this year, the single rate will increase by $32.49 a week to $336.68 and the couples' rate will increase by $10.14 to $507.50 a week.

The increase also applies to people on disability, veterans', war widows' and carers payments.

Carers were also the recipients of more budget goodies, with the announcement that a previously ad hoc annual bonus will become a certainty each year.

The new annual carers supplement will give a $600 windfall to people caring for people with mental and physical disabilities.

About 500,000 people will be eligible for the payment.

"Carers make significant sacrifices caring for the most vulnerable in our community," Ms Macklin said. "The Government recognises the selfless contribution made by carers every day of their lives. Many are under significant financial pressure."