How changes to your deeming rates could affect your pension payments
What the end to the deeming freeze means for Age Pensioners
If you receive the Age Pension, changes that came into effect on 20 September could affect your payments.
Deeming rates used by the government to estimate the income pensioners earn from savings and investments have been frozen since May 2020. But recently changed.
These rates help determine eligibility for the Age Pension and other government payments, and they also affect how much part-rate pensioners receive.
Since 20 September 2025, the new deeming rates are:
0.75% for financial assets up to $64,200 for singles and $106,200 for couples (combined)
2.75% for assets above those thresholds
This marks a significant increase from the previous rates, which remained at 0.25% (lower threshold) and 2.25% (upper threshold) for more than five years, despite multiple interest rate hikes.
What the change means for Age Pensioners
The deeming system assumes that financial assets earn a set rate of return, regardless of actual performance.
This simplifies the income assessment process and provides consistency across different types of investments, including savings accounts, shares, ETFs and managed funds.
While this change won’t affect everyone, pensioners with significant savings or investments may see a reduction in their payments due to higher deemed income. The impact will vary depending on individual financial circumstances.
The government estimates that freezing deeming rates since 2020 saved social security recipients around $1.8 billion. However, in announcing the change, the government signalled a gradual return to more typical settings.
“As Australians begin to feel the positive impacts of inflation easing, the Government will now gradually return deeming rates to pre-pandemic settings - that is, to reflect rates of return that pensioners and other payment recipients can reasonably access on their investments,” a government media release noted.
“Even with these increases, the deeming rates will remain below historical pre-COVID averages.”
How it could affect your Age Pension
The change in deeming rates has been timed to coincide with the regular indexation of the Age Pension and other government payments.
Since 20 September, people receiving the full single rate of the Age Pension saw their fortnightly payments increase by $29.70. Couples receiving the full pension saw an increase of $22.40 per person each fortnight.
However, for those with higher levels of financial assets, the increase in deemed income may offset some or all of this rise. The actual impact will depend on your personal financial situation.
In a related move, the government has also announced that the Australian Government Actuary will take over responsibility for recommending deeming rates in future. Currently, these rates are set by the Minister for Social Services.
Assess your situation
If you currently receive the Age Pension, it’s important to understand how these changes could affect you.
You can find more information about the Age Pension on the Services Australia website, and view changes to the payment rates on the Department of Social Services website.
Taking time to understand these changes so you can budget and plan with confidence in the months ahead, alternatively, give us a call.
Source: September 2025
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™
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