Changes to Commonwealth Age pension and Centrelink payments received by 460,000 Australian citizens will soon be affected by the impending changes to the deeming rates which will take effect on September 20, 2025. These rates, which came into effect on September 20, 2025, will be the first changes made to the parameters of deeming to the thresholds of $900 and $2,600 which were set during the pandemic lockdown period of 2020. These changes will also be the first changes made to the parameters of deeming since the rates were set during the early pandemic period.
What are Centrelink’s deeming rates?
Centrelink deeming rates are set when Centrelink assigns a value to financial holdings such as shares, cash, and superannuation regardless of whether the individual has earned a return on them. This income is then considered when a person is applying for income-tested payments which include the Age pension, a Disability Support Pension, or JobSeeker. At the moment, the rates which have been outstanding for cron five years is a lower band of 0.25 and an upper band of 2.25.
Rationale for Adjustment
Deeming rates were frozen to to assist older Australian during the COIVD-19 era when Australia’s cash rates were at all-time low, and were set by the RBA. With the ongoing improvements in the post pandemic period (the pandemic’s impact receded), and the gradual decrease of inflation, the government intends to bring the deeming rates back to pre-pandemic rates at a slower pace to pay for investment returns for pensioners.
Scheduled Changes to Deeming Rates Post September 2025
According to government policy, starting September 20, 2025, the lower deeming rate is set to rise from 0.25% to 0.75% which will now apply to singles and couples with combined financial assets of up to $64,200 and $106,200 respectively. The new upper rates will now apply to amounts which exceed the limits set above (deeming rates to pay to $64,200 and $106,200). The upper rate is set to increase by 0.5% to 2.75%. Aiming to bring social security income assessment in line with economic conditions is the reason justification for the rate increase.
Rationale Impact on Welfare Recipients and Pensioners
These deeming rate changes will affect nearly 460,000 Australians on Age Pensioners, all other people who alongside age pensioners, are on JobSeeker and parenting payments. For many people, the estimated income for the income test will be more, which will lead to a decrease in the payment entitled to which is certainly the case in most situations. The variety in impact is however very high and should be most analyzed on the basis of personal assets number and whether the income test or assets test is more strict.
Examples of Effects
Some pensioners might little experience little change because the financial asset test dominates and other sources of income is low. On the other hand, people with income sources such as Defined Benefit pensions tend to lose some of their Centrelink payments because of a higher deemed income calculation.
What Else Changes Besides Deeming Rates
| Topic | Details |
|---|---|
| Changes Besides Deeming Rates | From September 20th, Centrelink payment rates and income/asset thresholds will be indexed to offset cost of living pressures. Australian Government Actuary will advise on deeming rate changes to align with economic conditions. |
| Planning for the Future | Recipients encouraged to work with financial planners to maximize Centrelink payments and optimize retirement savings/investments. Deeming rates policy marks a shift to realistic investment return rates. Staying informed and prepared is crucial. |
