Centrelink win for 460,000 pensioners in $450 million federal budget move
Deeming rates will remain frozen for another year, allowing pensioners to keep more of their Centrelink payments in their pockets. The government confirmed it would not lift rates in the 2025 Federal Budget to help older Aussies deal with the rising cost of living.
Deeming rates are the rates of return the government assumes people earn on their financial assets, regardless of what they actually earn. That means if you earn more than the deemed rate, it isn't counted by the government when working out your payments. It applies to financial assets like shares, superannuation and bank accounts.
The freeze applies to all people receiving Centrelink payments, including around 460,000 age pensioners whose rate of payment are impacted by deeming.
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Rates have been at their current levels, with a lower rate of 0.25 per cent and an upper rate of 2.25 per cent, since May 2020. Usually rates track in-line with the Reserve Bank of Australia cash rate, which is currently 4.10 per cent.
While deeming rates were not mentioned in the Budget papers, a Department of Social Services representative has said they will remain frozen for another year.
The former Coalition government froze rates in 2022 for two years as a cost-of-living measure after the RBA started increasing interest rates. The Labor government then extended this freeze last year to July 1, 2025.
The decision not to lift deeming rates will be a hit to the budget.
The government has estimated that a 1 percentage point increase in deeming rates saves about $1.8 billion over the four-year forward estimates, or about $450 million a year.
Find out how the 2025 Federal Budget will impact you by following Yahoo Finance’s coverage here.
What are the deeming rates for age pensioners?
For singles, the first $62,600 of your financial assets have a deemed rate of 0.25 per cent. Anything over $62,600 is deemed to earn 2.25 per cent.
For couples where at least one person gets a pension, the first $103,800 of your combined assets have a deemed rate of 0.25 per cent. Anything over $103,800 is deemed to earn 2.25 per cent.
The government indexes deeming rate thresholds every July 1, in line with increases in the cost of living.
You can read more about deeming rates and how they impact your pension here.
What else is in the budget for pensioners?
The Labor government has promised to reduce the price of PBS-listed medicines to no more than $25 a script, should they be re-elected.
