The Australian government has announced significant changes to Age Pension payments, set to take effect on 20 September 2025. These adjustments involve both an increase in pension rates and a rise in deeming rates, which could affect your fortnightly payments. Here’s a comprehensive breakdown to help you navigate these changes.
Pension Rate Increases: More Money in Your Pocket
From 20 September 2025, the Age Pension, along with the Veteran Payment, Disability Support Pension, and Carer Payment, will see an increase due to indexation. This adjustment aims to keep welfare payments aligned with the rising cost of living and wages.
- Single pensioners: An increase of $29.70 per fortnight, bringing the maximum payment from $1,149.00 to $1,178.70.
- Couples (combined): An increase of $22.40 per fortnight, raising the combined payment from $1,732.20 to $1,777.00.
This indexation is the most substantial in two years, reflecting ongoing inflationary pressures.
Deeming Rate Changes: Impact on Income Test
In addition to the pension rate increases, the government has announced a 0.5% increase in deeming rates, marking the first change in four years. Effective from 20 September 2025, the lower deeming rate will rise from 0.25% to 0.75%, and the higher rate will increase from 2.25% to 2.75%. These changes could affect pension payments under the income test.
- Full-rate pensioners: Approximately 180,000 full-rate pensioners may become part-rate pensioners due to the deeming rate increase. However, many of these individuals will still receive a higher pension payment than before, thanks to the indexation.
- Part-rate pensioners: Around 470,000 part-rate pensioners will experience an increase in their payment from indexation, offset by a decrease from the deeming rate change. The exact impact will vary depending on individual circumstances, such as asset levels and whether they are homeowners.
Important Considerations
- Notify Centrelink of Changes: It’s crucial to inform Centrelink if your financial or personal circumstances change, such as an increase in the value of your assets. Conversely, if your assets decline, you can request a review of your pension, which may lead to an increase in your payment under the income or assets test.
- Complex Means Testing: The interplay between pension indexation and deeming rate changes can be complex. The exact impact on your payments will depend on various factors, including your asset levels, homeownership status, and employment income.
National Seniors Australia’s Stance
National Seniors Australia (NSA) acknowledges the pension rate increases as a positive step but expresses concern over the deeming rate changes. NSA Chief Executive Officer, Chris Grice, stated that while the indexation is welcomed, the increase in deeming rates could offset some of the benefits for pensioners. NSA had previously advocated for a continuation of the deeming rate freeze, suggesting that any increase should be modest and aligned with falling interest rates.
Looking Ahead
The upcoming changes to Age Pension payments underscore the government’s efforts to balance fiscal responsibility with support for older Australians. While the pension rate increases provide immediate relief, the adjustments to deeming rates highlight the ongoing complexities of means testing. It’s essential for pensioners to stay informed and proactive in managing their circumstances to ensure they receive the full benefits to which they are entitled.
For more detailed information and personalized advice, consider visiting the National Seniors Australia website or contacting Centrelink directly.
