For many Australians relying on Centrelink payments, especially age pensioners, financial assets play a crucial role in determining eligibility and payment size. In September 2025, the government lifted a five year freeze on deeming rates, meaning more individuals will face higher deemed income from their savings, shares, or super. This change could cause reductions in some pension payments despite the usual indexation increases. Here’s what you need to know about the centrelink deeming rate impact and how it may affect your next payment.
What is Deeming
Deeming is a rule used by Centrelink to estimate how much income your financial assets are earning, regardless of your actual returns.
- These deemed returns are added to your other income and assessed under the income test to determine how much Centrelink support you are eligible for.
- If your actual return is higher than the deemed rate, only the deemed amount is counted toward your income test. The extra earnings are not counted.
- Deeming does not apply to your family home. It only applies to financial assets such as savings accounts, shares, managed funds, and some forms of super.
Because of deeming, your payments can remain stable when interest rates are low. But when the deemed rates rise, your assumed income rises, which can reduce your Centrelink support.
What Changed in 2025
When did it happen
The new deeming rates came into effect on 20 September 2025, at the same time as the regular indexation of many Centrelink payments such as the Age Pension. Recipients do not need to apply. The changes are applied automatically in the next payment cycle.
From what, to what
The deeming rates were frozen at very low levels during the pandemic years. As of 20 September 2025 the new rates are:
| Category | New Lower Deeming Rate | New Upper Deeming Rate |
|---|---|---|
| Up to threshold | 0.75% | — |
| Above threshold | — | 2.75% |
Thresholds for 2025–26:
- Single pensioner: first $64,200 of financial assets is deemed at 0.75%. Everything above is deemed at 2.75%.
- Couple: first $106,200 combined is deemed at 0.75%. Everything above is deemed at 2.75%.
This is an increase of 0.50 percentage points compared with the previous 0.25% and 2.25% rates.
Why the Change Matters
Who is most affected
- Part pensioners whose payments are reduced under the income test due to their financial assets.
- Age pensioners who typically hold more financial assets.
- Around 69,500 pensioners may see a drop in their fortnightly payments.
- The average reduction is about $6.70 per fortnight.
Why payments can still increase
Even if your pension is reduced due to higher deeming, the indexation increase of pensions and benefits may offset or partially offset that reduction. In many cases, the pension rise may outweigh the extra deemed income.
For example, the Age Pension, Carer Payment, and Disability Support Pension increased on 20 September 2025, with singles receiving an extra $29.70 fortnightly. For those with modest financial assets, the net result may still be positive.
How to Work Out if You Are Affected
- Add up your financial assets such as bank savings, shares, managed funds, and super in pension phase.
- Subtract the threshold amount (for example $64,200 for singles or $106,200 for couples).
- Apply 0.75% on the portion up to the threshold, and 2.75% on the excess.
- Add that amount into your income test.
- Compare it with the income test cutoffs to see if it reduces your pension.
- Factor in the September 2025 indexation boost to see the overall effect.
If your actual investment return is higher than the deeming rate, the extra earnings are not counted for the income test.
Tips to Reduce the Impact
- Review your financial asset allocation and consider moving to concessional investments.
- Try to stay under the threshold where possible.
- Spend or gift excess cash within the allowed Centrelink rules to reduce your financial assets.
- Reassess your superannuation drawdown strategy.
- Seek financial advice to structure assets in a way that lessens the deeming burden.
Other Centrelink Changes in 2025
- Age Pension, Carer Payment, Disability Support Pension, JobSeeker, Youth Allowance, and Rent Assistance all received indexation increases on 20 September 2025.
- Income thresholds and eligibility limits were adjusted.
- The government ended the freeze on deeming rates, opening the possibility of further changes in the future.
