Deeming rate changes from 20th of September 2025

Firstly, what is deeming? Deeming and deeming rates apply to many different Centrelink payments. I like to think of it as: if you bundle up all of your financial assets like bank accounts and account-based pensions, you will come up with one number. Now, Centrelink doesn’t actually look at each individual asset you have and assess the earnings for each asset — they bundle them up and apply a blanket “deeming rate” to all the financial assets. This amount is then added to your income to help calculate your entitlement.

To view a more detailed summary of deeming in relation to the Age Pension, you can visit Services Australia’s website here.

Since 2020, deeming rates have been at historically low levels and remained that way for quite some time (due to the COVID-19 pandemic).

From the 20th of September 2025, they will be increasing. There are two main rates — the lower rate, currently 0.25% p.a., will increase to 0.75% p.a., and the upper rate will increase from 2.25% p.a. to 2.75% p.a.

There are different thresholds these apply to depending on your situation. Everyone is impacted differently. If you are income tested, for example, this will likely have an immediate impact. Then there are those who are asset tested — depending on your other income sources and asset levels, it may have an impact also.

It was probably a long time coming, the increase in deeming rates — and considering the RBA cash rate is 3.6% (and was previously higher), it does make sense that they increase, noting that there are many factors involved in setting the deeming rate. But since the end of 2022, most people in conservative investments, even with just savings accounts, were earning more than the deeming rate anyway.
For further reading it was announced here on the 20th of August 2025.