Deeming rates will increase for the first time since 2020 starting next week. The government kept these rates frozen during the pandemic to help people deal with high prices and living costs. Now they believe the economy is doing better so it’s time to change the rates back to normal.
Social Services Minister Tanya Plibersek announced that deeming rates will go back to their pre-pandemic levels on September 20. This change marks the end of a special measure that was put in place to support people during tough times.
“This means we want to match the interest rates that retirees & other people can actually get when they invest their money” she explained.
Deeming rates explained: What they are and how they affect your pension
Deeming rates are numbers that show how much money the government thinks people make from their savings & investments. These include money in bank accounts shares and retirement funds.
The rates help decide if someone can get government support payments like the Age Pension, JobSeeker or parent benefits.
The rates have stayed at 0.25% and 2.25% since 2020. If you are single the first $64200 of your money will earn 0.25% interest.
Any money above $64,200 will earn 2.25% interest.
Here’s how Centrelink looks at your money when you or your partner gets a pension. They use two different rates. The first $106200 that you both own together gets a small rate of 0.25%.
If you have more money than that they apply a bigger rate of 2.25% to the extra amount. This helps Centrelink figure out if you can get payments from them. They check your current income and also look at other money you get like super payments. It’s their way of making sure they give support to the right people.
Many people in Australia get money from both the government and other places. Over 771,000 people deal with deeming rates when they get welfare payments. This includes older people on the age pension which is about 460,000 people.
It also affects 96,000 people who get JobSeeker and 62000 people who receive disability support payments. The deeming rates change how much money these people can get from the government based on their other income.
Updated deeming rates 2025: Key figures every pensioner must know
The deeming rate for lower amounts will go up to 0.75 percent starting September 20. For money above the limits the higher rate will increase to 2.75 percent.
The Minister for Social Services said they plan to keep raising these rates over time. Some people will also get higher Centrelink payments from September 20 when regular payment updates happen.
The Australian Government Actuary will now decide if deeming rates should go up or down.
Minister Plibersek explained that they will suggest the best rate based on the economy. The government can still step in & make changes when needed especially during unusual situations.
The reason behind the change: Why the government is adjusting deeming rates now
The government kept deeming rates unchanged in early 2020 when COVID-19 hit Australia. These rates usually follow changes in the RBA’s cash rate.
In 2022 the central bank started to increase interest rates. The rates went up from a very low 0.10% to 4.35%. This was the highest rate in 13 years. The government wanted to help people with their money so they kept some rates the same.
This stopped people from losing too much money at once. The high prices in stores started to go down. They dropped from 7.8% at the end of 2022 to just 2.1% by June 2025.
Interest rates went down three times this year. They might go down again in November. If this happens the rate will drop by 1% in 2025.
