The government has revealed it will begin changing deeming rates for pensioners and other Centrelink recipients. Deeming rates are the rates of return the government assumes people earn on financial assets, including shares, superannuation and bank accounts.

They have been frozen at 0.25 per cent and 2.25 per cent, respectively, since 2020. But Social Services Minister Tanya Plibersek has revealed this is about to change.

“As Australians begin to feel the positive impacts of inflation easing, the government will now gradually return deeming rates to pre-pandemic settings,” she said.

“That is, to reflect rates of return that pensioners and other payment recipients can reasonably access on their investments.”

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How do deeming rates work?

They impact means testing for Centrelink payments, including the Age Pension, JobSeeker and parenting payments.

For singles, the first $64,200 of your financial assets has a deemed rate of 0.25 per cent.

Anything over $64,200 is deemed to earn 2.25 per cent.

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For couples where at least one person gets a pension, the first $106,200 of your combined assets has a deemed rate of 0.25 per cent. Anything over $106,200 is deemed to earn 2.25 per cent.

Centrelink uses this method to work out your eligibility for certain payments that takes into account your future income as well as other streams of money like superannuation.

There are a little more than 771,000 people who receive government welfare and who have income from other sources that are affected by deeming rates.

That includes about 460,000 aged pensioners, 96,000 on JobSeeker payments, and 62,000 disability support pension recipients.

Why are the deeming rates changing?

The government froze deeming rates at the start of the decade while the country was in the grips of the pandemic.

The rate is typically tied to the Reserve Bank of Australia's (RBA) official cash rate.

In mid-2022, the central bank began an interest rate-hiking cycle, which saw the cash rate jump from the record low of 0.10 per cent to a 13-year high of 4.35 per cent.

As a result, the government kept deeming rates frozen to prevent people from suffering a double hit to their finances.

But headline inflation has gradually been coming down from its December 2022 peak of 7.8 per cent to 2.1 per cent at the June 2025 quarter.