From 20 September 2025, many Australians will see changes to their Age Pension and income test rules. For the first time since 2020, deeming rates have been raised, reflecting a stronger economy and easing inflation. While the increases will result in higher payments for many, some part-pensioners and Commonwealth Seniors Health Card (CSHC) holders may notice adjustments to their entitlements. For retirees already juggling cost-of-living pressures, understanding these changes is crucial.
This article explains the updated deeming rates, new Age Pension payment amounts, and what they mean for your financial situation — including how they can affect aged care costs.
What Are Deeming Rates and Why Do They Matter?
Deeming rates are a way for the Government to assess the income you’re assumed to earn from your financial assets. Instead of looking at the actual returns on savings, investments, or super, Centrelink ‘deems’ a standard rate of income based on set thresholds.
This system simplifies assessments, ensuring fairness between people with similar assets but different investment choices. It also encourages retirees to choose investments based on suitability, rather than just Age Pension outcomes.
However, deeming can significantly impact how much Age Pension you receive, your eligibility for the CSHC, and even the fees you pay if you move into residential aged care.
The New 2025–26 Deeming Rates
From 20 September 2025, deeming rates will increase:
- Singles: 0.75% on the first $64,200 of assets, then 2.75% above that.
- Couples (combined): 0.75% on the first $106,200 of assets, then 2.75% above that.
Until then, the frozen COVID-era rates of 0.25% and 2.25% remain in place.
Example: Jane, who is single with $75,000 in investments, will be deemed to earn $778.50 per year — about $29.94 a fortnight. For a couple with $150,000 combined, deemed income will be $2,001 a year, or $79.96 per fortnight.
Age Pension Increases from September 2025
Alongside deeming changes, Age Pension rates will also rise. From 20 September 2025, people on the full single rate of Age Pension will see a $29.70 boost per fortnight. This continues the Government’s push to align pensions with the cost of living, meaning full-rate recipients are nearly $5,000 better off annually compared with 2022.
Over 5 million Australians will benefit from this indexation, including Age Pensioners, Disability Support Pensioners, and Carer Payment recipients. Rent Assistance, JobSeeker, and other payments will also increase.
How Deeming Rates Affect Aged Care
It’s important to remember deeming rules don’t just affect Age Pension payments. For anyone entering residential aged care, deeming rates are used to calculate means-tested contributions. This means an increase in deemed income could also affect the fees you pay for accommodation and care.
The value of your family home is excluded, but assets like bank accounts, shares, and super are included in deeming calculations. Knowing this in advance can help you and your family plan for aged care costs.
Why the Changes Were Made
The Albanese Government has confirmed that the freeze on deeming rates — introduced during COVID to protect retirees from losing entitlements — is no longer suitable. With the cash rate now at 3.6%, the new deeming rates of 0.75% and 2.75% are still well below historical averages, but better reflect what pensioners can reasonably earn on their savings.
Future reviews of deeming will now be overseen by the Australian Government Actuary to ensure fairness and transparency.
Key Takeaways for Retirees
- Payments are rising: Full-rate pensioners will receive more in their bank account from 20 September 2025.
- Part-pensioners may be affected: Some with financial assets could see changes due to higher deeming rates.
- Aged care costs may shift: Deeming applies to means testing in aged care, not just pensions.
- Planning is essential: Understanding how deeming interacts with your assets can help protect your entitlements.
Why Personal Advice Matters
For many retirees, these changes bring welcome relief. But the impact will differ depending on your circumstances — your savings, investments, and aged care needs. Knowing exactly how deeming rates and pension adjustments affect you is key to making confident financial decisions.
The Aged Care team at Priority Advisory Group can help you navigate these changes, protect your pension, and plan for the future. Call us on 1300 349 188 or visit our Contact Page to book a conversation today.
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