From 20 September 2025, the Australian Government will update the deeming rates used in the Age Pension income test.
If you currently receive the Age Pension, or plan to apply soon, this could affect how Centrelink assesses your income and, ultimately, how much you’re paid.
What Are Deeming Rates?
Deeming rates are a set of assumed interest rates that Centrelink uses to calculate the income you earn from financial investments. Instead of looking at the actual return you receive, Centrelink “deems” your investments to earn a certain rate of income.
They basically work to simplify the system, so you don’t have to report every dollar of interest, dividends, or returns. But it also means the income Centrelink counts may not match your actual investment earnings.
What’s Changing from September 2025
For several years, deeming rates have been frozen at historically low levels to reflect the low-interest rate environment, sitting at:
- 25% applies to the first $60,400 of financial assets for singles (or the first $100,200 for couples combined).
- 25% applies to anything above those thresholds.
This freeze has been a win for many Age Pensioners, as their actual investment returns have often been higher than what Centrelink assumes.
From 20 September 2025, the freeze will end. The Government will review the rates, and they’re expected to increase in line with the current higher interest rate environment.
While the final rates will be confirmed closer to the date, pensioners should prepare for the possibility of a reduction in payments.
Why Do Deeming Rate Changes Matter?
- Your Age Pension Payment Could Change
If your investments are deemed to be earning more income, your assessable income goes up, and this could see a reduction to your Age Pension entitlement.
- Budgeting Becomes More Important
Even a small change in your Age Pension can impact your day-to-day budget, especially with rising living costs.
Who Will Be Affected?
These changes affect anyone on the Age Pension whose income is assessed using deeming rates, including:
- Pensioners with bank accounts, shares, or managed funds.
- Self-funded retirees moving onto part pensions.
- Couples whose combined assets are deemed under the rules.
If most of your retirement income comes from the Age Pension (rather than investments), the impact may be minimal. But if you hold significant financial assets, it’s worth paying close attention.
How to Prepare for the Changes
Here are a few practical steps to take before 20 September 2025:
- Review Your Investments
Check what financial assets you hold (bank accounts, shares, term deposits, managed funds) and how they’re structured.
- Understand Your Cash Flow Needs
Know how much income you rely on from the Age Pension and where you may need to adjust.
- Seek Professional Advice
A financial adviser can run projections to show how changes to the deeming rate might affect you and suggest strategies to help manage the impact.
FAQs
Will I lose my Age Pension entirely?
Not necessarily. Most people will still receive a pension, but the amount may change. It depends on your income, assets, and how Centrelink assesses them under the new rates.
Do deeming rates apply to all investments?
They apply to financial investments such as bank accounts, shares, managed funds, and term deposits. They don’t apply to your home or personal belongings.
Can I reduce the impact?
Yes, by reviewing your investment mix and financial plan. An adviser can help you explore strategies that fit your situation.
The Age Pension is more than just a payment-it’s often the foundation of retirement income. When deeming rates change, it can ripple through your entire financial plan. That’s why it’s important to regularly review your strategy, not just when the Government announces updates.
Need Help Understanding What This Means for You?
If you’re worried about how the deeming rate changes could affect your Age Pension, you’re not alone. The good news is, with the right planning, you can stay in control.
Our advisers can walk you through the changes, explain how they apply to your personal situation, and help you adjust your retirement plan if needed. Book a chat with our team today.
