Australia Raises ‘Deeming Rates’ to 1.75 Percent, What It Means for Pensioners

Representative bodies for seniors have responded after the federal government announced it was increasing the “deeming rate” for pensioners.

Centrelink uses a complicated “deeming rate” to estimate—not measure—how much income a person’s financial assets generate, which in turn, determines how much of the age pension they can receive.

Some Australian pensioners with savings and investments could see their pension lowered after the latest changes on Aug. 20, which lifts the deeming rate by 0.5 percent.

So that means the deeming rate increases from 1.25 percent to 1.75 percent for assets worth up to $66,800 for single people, and $110,600 in value for couples.

Financial assets worth more are set at a 3.75 percent rate.

The impact of the higher deeming rates will be partly offset by pension indexation from Sept. 20, with maximum payments increasing by $36.80 a fortnight for singles and $55.60 combined for couples.

As of 2025, around 2.9 million Australians aged over 65 were on some form of Centrelink payment, with most receiving the age pension.

Rate Could Have Been Higher: National Seniors

Brendon Radford, NSA’s director of policy and research, said the current increase was expected after deeming rates were frozen the past two years amid higher inflation.

“NSA has always maintained any lift to deeming rates should be incremental and timed with indexation to best protect those impacted,” he said in a statement.

“While we acknowledge some pensioners may experience a fall in the pension in September, it could have been worse.”

While the group backs a deeming rate increase, it does not support the government’s move to cut the rebate for over 65s receiving private insurance.

“We continue to oppose the proposed cut to the higher Private Health Rebate for Australians 65 years-and-older and believe that employment income should be exempt from the Age Pension income test and we will keep advocating for these,” Redford said.

Ageing Council to Watch Deeming Rates

Council on the Ageing (COTA) CEO Patricia Sparrow welcomed the increase to pensions.

“The idea that all older Australians are wealthy is a myth,” she said.

“In reality, over one in four live in poverty For those struggling with skyrocketing costs, an extra $29.70 a fortnight will bring real relief.”

But Sparrow said COTA would be keeping a close eye on the deeming rate.

“The government has stated that the changes to the deeming rate will reflect rates of return that pensioners and other payment recipients can reasonably access on their investments,” she said.

“We’ll now be watching closely to make sure the government’s statement—that deeming reflects what people can actually earn—is delivered in practice, not just in theory.”