Age Pension Increase and Deeming Rate Changes
Friday, August 15, 2025
From 20th September 2025, all Australians receiving the Age Pension will be in receipt of important changes that could affect their income and financial situation.
Self-funded retirees, who also receive an Age pension, will experience a change in this income over the next few weeks – most will see an increase, but some may experience a decrease.
The changes include an increase in pension payments and an adjustment to the way income from savings and investments is calculated. These are changes that many retirees should understand to make sure they get the most from their pension.
Why Is the Age Pension Increasing?
Twice a year, in March and September, the Australian government adjusts Age Pension payments to help keep pace with the cost of living. These adjustments assist pensioners to keep up with rising prices for essentials like food, energy, and healthcare. The government will increase the Age Pension by $29.70 per fortnight for single pensioners and $44.80 per fortnight combined for couples. This means singles could receive up to $1,178.70 per fortnight, and couples combined can get $1,777.00 per fortnight.
What Are Deeming Rates and Why Are They Changing?
Deeming rates are how Centrelink calculates the income your savings and investments are earning, even if you don’t in fact receive that money in interest or dividends. This “deemed income” is used in the pension income test to work out how much pension you’re eligible for.
For the past two years, deeming rates were frozen to protect part-pensioners while interest rates were rising. But from 20 September 2025, these rates will increase by 0.5%. For example, the lower deeming rate will jump to 0.75% and the higher deeming rate to 2.75%. This means Centrelink will assume your savings generate a little more income, which could reduce your pension if you are on a part pension under the income test.
What Does This Mean for You?
If you currently receive a full Age Pension, this increase will likely add more money to your fortnightly payments.
But if you are on a part-pension, the bigger deeming rates may reduce your pension because Centrelink will assume your investments are earning more.
Research by National Seniors Australia suggests around 180,000 people who currently get the full pension might see it drop to a part pension because of the higher deeming rates.
However, many will still get more money overall because of the pension payment increase.
Why Talk to a Financial Adviser?
With these changes, self-funded retirees also on an Age Pension may find it worthwhile reviewing their situation with a qualified financial adviser, especially if you rely on investments for income and receive a part-pension. Understanding these changes and getting expert advice can help you make better decisions to protect your retirement income.
They can help you:
- Understand how the changes affect your pension payments
- Look at ways to manage your income and assets to keep or increase your entitlements
- Work out if you can get extra support or concessions from Centrelink
- Plan your finances so your retirement income is as secure and tax-efficient as possible
The team at Maher Digby Securities are specialists in retirement investing and offer a complimentary initial consultation.
For more Information contact Mark Digby at Maher Digby Securities Pty Ltd - Financial Advisers – AFSL No. 230559. This document was prepared without taking into account any person’s particular objectives, financial situation or needs. It is not guaranteed as accurate or complete and should not be relied upon as such. Maher Digby Securities does not accept any responsibility for the opinions, comments, forward looking statements, and analysis contained in this document, all of which are intended to be of a general nature. Investors should, before acting on this information, consider the appropriateness of this