If you’re an Australian pensioner, or approaching retirement, there’s a big date looming on the horizon that could have a real impact on your hip pocket.
From 1 July 2025, the rules around ‘deeming rates’—a key part of how your Age Pension is calculated—could be set to change.
And for many, that could mean a significant drop in your fortnightly payments, right when the cost of living is already biting hard.
So, what’s all the fuss about? Let’s break it down, and show you how to check your own situation—and what you can do to have your say.
What are deeming rates, and why do they matter?
Deeming rates are a bit of government wizardry used to estimate the income you earn from your financial assets—things like savings accounts, shares, and term deposits.
Instead of looking at what you actually earn, Centrelink ‘deems’ (or assumes) you’re earning a set rate of interest, and uses that figure to work out how much Age Pension you get.
This system is meant to keep things simple, but it can have a big impact on your payments.
If the deeming rate is high, Centrelink assumes you’re earning more, and your pension can be reduced—even if your actual returns are much lower.
The freeze that saved pensioners—for now
For the past three years, the government has kept deeming rates frozen at historically low levels, even as interest rates have soared.
This has been a lifeline for many older Australians, protecting them from sudden drops in their pension payments while the cost of everything from groceries to petrol has gone through the roof.
But that freeze is set to end on 1 July 2025, unless the government steps in again.
If the old method for setting deeming rates returns, many pensioners could see their payments slashed—at a time when every dollar counts.
How much could you lose?
National Seniors Australia (NSA) has crunched the numbers, and the results are sobering.
In a worst-case scenario, a couple who own their home could lose up to $285 per fortnight, while a single homeowner could be down $203 per fortnight.
That’s over $7,400 a year for a couple—not exactly small change.
And it’s not just ‘wealthy’ pensioners with big nest eggs who are at risk. NSA’s modelling shows that both full-rate pensioners and those on a part pension could be affected.
In fact, as many as half a million full-rate Age Pensioners could see their payments drop if the old deeming rules come back.
Why now is the worst time for a cut
NSA’s CEO, Chris Grice, puts it bluntly: ‘Older Australians are still struggling to pay necessities, such as utilities, petrol, groceries, and rent. A continued freeze on deeming rates would spare pensioners and other income support payment recipients from suffering a drop in income.’
With inflation still high and interest rates yet to ease, now is not the time to be tightening the screws on those who can least afford it.
What can you do? Try the estimator and join the campaign
Worried about how this could affect you?
NSA has created a simple online estimator tool that lets you see how much your Age Pension could fall if deeming rates revert to the old method.
It’s quick, easy, and could give you a much-needed heads-up about what’s coming.
You can also join NSA’s campaign to keep the freeze in place until interest rates come down. The more voices the government hears, the better the chance of a fair outcome for all retirees.
What should happen next?
NSA is calling for any changes to deeming rates to be introduced gradually, with plenty of warning and transparency.
NSA CEO Chris Grice said, ‘NSA wants the government to continue the freeze on deeming until interest rates ease further. It’s a sensible way to help older people meet daily living costs.’
No one wants to see older Australians blindsided by a sudden drop in income, especially when so many are already doing it tough.
He added, ‘Any change to deeming rates should be introduced in a measured, incremental, and transparent way. We don’t want a situation where older Australians, struggling under cost-of-living pressures, are hit harder.’
Your voice matters
Have you used the estimator to check how potential changes to deeming rates could affect your pension? Are you concerned about making ends meet if your payments drop? Or do you believe the system needs a complete overhaul? What changes would you like to see in how the government supports older Australians?
We want to hear from you! Share your thoughts, experiences, and suggestions in the comments below. Your voice could help shape the future for all Australian retirees.
Also read: What the end of the deeming freeze could mean for pensioners
Are you sure of your calculations. Given that the current deeming rate for most averages about 2+%…..and your saying it could go to 5.6% ,,that’s nearly triple triple the return on investments. For example $500k currently deemed at $10,050. But the new rates of 3.8% & 5.6%. would return $26,800.
For a single pensioner that’s $1030 a fortnight. If the allowance is $212….your $818 over the allowance & @ 50c reduction, your down $409 a fortnight.
That’s a LOT more than your example….or have I missed something.
Hear we go again – lets slug the pensioners, what about slugging the useless, lazy, robbing, lying, non communicating overpaid useless politicians, both Federal and State, who get wage increases but dont increase their work load or ethics accordingly – let these bludgers live on what we have to for 6 months – bet a lot of the fat – sit on arse – no hoping politicians would change their minds – as you may guess – I am EXTREMELY angry – thanks all you idiots who voted them in – again
Where does Centrelink get the information on what values you have in your savings accounts, shares, and term deposits.
If they have that information then they also have access to the value of your income from them, and therefore do not need to “deem” an income level as they will know the actual income level !!!
Which means that those receiving less than the current deeming value, will be “charged at the lower actual rate” and those that have higher rates, will be charged at their higher rate !!
In my experience Centrelink uses their deeming rates to assess how much you will get. The deeming rate that they use is above the actual rate that you receive, I can prove it, but they will not listen. I spoke to Labor people in the lead up to the election and received a promise that they would check, but have not heard of anything since. So obviously they do not care. Plus Albanese is apparently proposing new taxes. Great, he will not have to comply as he is the Prime Minister. More for the politicians again, less for everyone else.
Deeming rates should stay on hold and not be INCREASED at a time when the reserve is cutting rates and the talk has been that the official cash rate could slide to 2.8%. Term deposit rates have crashed with all institutions slashing above the official rate cuts and almost all banks pay nothing on general savings. True those who invest in shares or bitcoin may be getting higher returns but that comes with high risk of big losses. One shape doesn’t fit all and it’s time pollies realised that.