Five years after being cut to historic lows during the COVID-19 pandemic, deeming rates have now increased — impacting how the government calculates your income from financial assets.
This change could affect how much age pension or other Centrelink income support you receive. If you’re a part-pensioner or have financial assets like savings, shares, or superannuation, here’s what you need to know.
What Is Deeming?
Deeming is a set of rules used by Centrelink to estimate how much income you earn from financial assets such as:
- Bank accounts
- Shares and managed funds
- Superannuation (for people over age pension age)
- Term deposits and other investments
Rather than assessing your actual investment income (which can vary), Centrelink assumes your assets earn a “deemed” rate of return. This simplifies the income test for payments like the age pension.
Key point:
If your actual returns are higher than the deeming rate, that extra income isn’t counted — which can benefit savvy investors.
When Did the Deeming Rate Changes Happen?
The changes came into effect on Saturday, September 20, 2025, coinciding with the regular indexation of government payments such as:
- Age Pension
- Disability Support Pension
- Carer Payment
- JobSeeker and Youth Allowance
These deeming rate increases were announced in August 2025 and are the first in five years, following pandemic-era cuts designed to help older Australians cope with low interest rates and cost-of-living pressures.
What Are the New Deeming Rates?
As of September 2025:
| Rate Tier | Old Rate (2020–2025) | New Rate (from Sept 2025) |
| Lower deeming rate | 0.25% | 0.75% |
| Upper deeming rate | 2.25% | 2.75% |
How the deeming thresholds work:
- Single pensioners:
- First $64,200 of financial assets = deemed at 0.75%
- Any amount above $64,200 = deemed at 2.75%
- Pensioner couples (combined assets):
- First $106,200 = deemed at 0.75%
- Anything over that = 2.75%
Who Is Affected by the Changes?
These changes apply to any Centrelink income support recipient who has financial assets, but the most affected are:
- Age pensioners (the largest group impacted)
- Part-pensioners with significant investments or superannuation
- People nearing retirement with assessable financial assets
According to the Department of Social Services, age pensioners make up around 60% of those affected because they typically hold larger asset balances.
Will Payments Go Down?
Yes, but only for a small portion of pensioners.
- About 69,500 age pensioners are expected to see a reduction in their fortnightly payments.
- The median decrease is $6.70 per fortnight.
- For some, the drop could be more or less depending on individual financial circumstances.
Note: These reductions may be partly offset by the indexation increases to the age pension and other Centrelink payments.
Example – How Deeming Works Now:
Scenario: Single age pensioner with $100,000 in assets
- First $64,200 at 0.75% = $481.50
- Remaining $35,800 at 2.75% = $984.50
- Deemed annual income = $1,466
- Fortnightly income counted = ~$56.38
This income is used in the income test, which could reduce your pension depending on your other sources of income.
Why Do Deeming Rates Matter?
- The higher the deeming rate, the more income Centrelink assumes you’re earning.
- This can reduce your age pension if you’re near or over the income threshold.
- If you’re under the full-pension income cut-off, it may not impact you at all.
- If you earn less than the deemed rate, Centrelink still uses the deeming rate, not your actual income.
Conclusion
After five years of historic lows, deeming rates have now increased, affecting how Centrelink calculates income from financial assets. For tens of thousands of part-pensioners, this could result in a small reduction to their age pension. However, with these changes occurring alongside increases to the pension itself, the overall impact for most will be modest.
Looking ahead, deeming rates are likely to continue reflecting economic conditions and investment returns. Pensioners and retirees should consider reviewing their financial assets — including savings and super — and seek advice if needed to understand how future deeming changes may affect their entitlements.
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The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.
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