Australia’s pensioners and welfare recipients are about to face a big financial change. After five years of frozen deeming rates, the government has confirmed they will increase on September 20, 2025.
This change could affect Age Pension, JobSeeker, Disability Support Pension, and other Centrelink payments. Here’s a full breakdown of what’s happening, why it matters, and how it could impact your payments.
What Are Deeming Rates?
Deeming rates are a set of assumed interest rates the government uses to calculate income from financial assets.
Instead of looking at exactly how much you earn from bank accounts, shares, or superannuation, Centrelink assumes a standard rate of return. This simplifies the income test for pensions and payments.
Key point: Even if your money earns less than the deeming rate, Centrelink will still assess it at the deemed amount.
How Deeming Rates Work
- For single pensioners, the first $64,200 of assets is deemed to earn the lower rate. Anything above this is assessed at the higher rate.
- For couples (where at least one partner gets a pension), the combined threshold is $106,200.
Here’s a simple table:
| Status | Assets Threshold | Lower Rate | Higher Rate |
|---|---|---|---|
| Single | $64,200 | 0.25% (rising to 0.75%) | 2.25% (rising to 2.75%) |
| Couple | $106,200 | 0.25% (rising to 0.75%) | 2.25% (rising to 2.75%) |
What’s Changing on September 20?
From September 20, 2025:
- The lower deeming rate will rise from 0.25% to 0.75%.
- The upper deeming rate will rise from 2.25% to 2.75%.
This is the first increase since 2020, when the government froze rates during the pandemic to help pensioners manage rising costs.
Social Services Minister Tanya Plibersek has said this will be the first of several phased increases, with future changes guided by the Australian Government Actuary.
Why Are Rates Going Up Now?
The freeze began in 2020 to protect older Australians during the pandemic, when interest rates were at record lows.
But the economy has changed:
- Inflation has dropped from a 2022 high of 7.8% to just 2.1% in mid-2025.
- The Reserve Bank of Australia’s cash rate climbed to 4.35% during the inflation crisis but has since started falling.
- The government believes pensioners can now earn more reasonable returns on savings and investments.
Who Will Be Affected?
More than 771,000 Australians will feel the impact of these deeming rate changes, including:
- 460,000 Age Pensioners
- 96,000 JobSeeker recipients
- 62,000 Disability Support Pension recipients
- Plus thousands on parenting payments and other welfare supports.
If you have financial assets, your deemed income will rise, which could reduce your pension or payment rate.
Tips for Pensioners and Welfare Recipients
- Review your finances: Check how much of your assets fall under the lower vs higher deeming rate.
- Use Centrelink calculators: Services Australia has online tools to estimate your payments under new deeming rates.
- Consider financial advice: If you have investments or super, a financial adviser can help minimize impacts.
- Stay updated: Deeming rates may continue to rise in 2026. Keep an eye on announcements.
FAQs About Deeming Rates in Australia
1. What exactly are deeming rates?
Deeming rates are assumed rates of return used by Centrelink to calculate income from savings and investments for payment eligibility.
2. Will my pension definitely go down?
Not always. It depends on your level of assets. Some pensioners may see no change, while others could have reduced payments.
3. Do deeming rates affect everyone on Centrelink?
No. They mainly affect people with financial assets like shares, superannuation, or term deposits.
4. Can I challenge how my deemed income is calculated?
No. Deeming rules apply equally to everyone, regardless of actual investment earnings.
5. When will the next deeming rate review happen?
Future reviews will be advised by the Australian Government Actuary, but more increases are expected if interest rates remain higher than pre-pandemic levels.
Final Thoughts
The end of the five-year deeming rate freeze is a major shift for pensioners and welfare recipients. While it reflects stronger economic conditions, it may mean smaller payments for many Australians.
Now is the time to check your Centrelink entitlements, review your savings strategy, and seek advice if needed. Being prepared will help you adjust to these changes and protect your retirement income.