We want to make you aware of some important changes coming into effect from 20 September 2025, regarding Centrelink’s deeming rates. If you receive income-tested payments or benefits, or have savings or financial assets, these changes could affect you — and your financial planning.
What are deeming rates?
Deeming rates are the rates of return that Centrelink assumes you earn from your financial assets (such as cash, bank accounts, term deposits, and shares) when calculating your eligibility for income-tested payments. They don’t look at what you’re actually earning — just what they deem you to be earning.
What is changing, and when
As announced by Services Australia (read more here), from 20 September 2025 the deeming rates will rise:
| Rate | Current | From 20 Sep 2025 |
| Lower deeming rate | 0.25% | 0.75% |
| Upper deeming rate | 2.25% | 2.75% |
- The lower deeming rate applies to the first portion of your financial assets (up to the threshold set by Centrelink).
- The upper deeming rate applies to any amounts above that threshold.
These rates are applied automatically — you don’t need to do anything to trigger the change.
These deeming rates have been frozen since May 2020, despite interest rates rising significantly over the past few years. This upcoming increase marks the first change in over five years, reflecting today’s higher interest rate environment.
Will this affect your Age Pension?
If you’re receiving a part Age Pension, it’s worth noting that many people in this situation are assessed under the assets test rather than the income test.
That means you’re less likely to be impacted by the deeming rate changes, because your payment is primarily based on your level of assets rather than the income assumed from those assets.
However, if your Age Pension is assessed under the income test (or if you receive other income-tested payments), the deeming rate increase could affect your entitlement.
Impact on aged care fees
Deeming rates are also used to assess income for aged care means-tested fee calculations.
If you or a family member are receiving aged care services — whether in residential aged care or at home — the increase in deeming rates will increase the assessed income from financial assets, which may result in higher means-tested care fees being payable.
This is particularly important for those with significant cash or investment balances, as the higher deemed income can push overall assessed income higher even if the actual earnings haven’t changed.
What this means for your money
- If you have substantial cash or bank balances, the income Centrelink assumes you are earning from those funds will increase.
- If those balances are not actually earning close to the new upper deeming rate (2.75%), you may be missing out on income opportunities.
- Even if your Centrelink payments are unaffected, holding too much cash at very low returns could be dragging on your financial progress.
What you should do next
If you currently have a large amount of cash or low-return financial assets earning less than ~2.75%, now is the perfect time to review your strategy.
Your adviser can help you:
- Compare your current returns to market rates
- Explore other secure, income-producing options that suit your risk tolerance
- Assess any potential impact on your Centrelink entitlements or aged care means-tested fees
- Balance return, risk, tax and liquidity considerations
If you’re unsure whether these deeming rate changes could affect you, or if you have a lot of funds sitting in the bank earning minimal interest, please contact us to arrange a review. A quick check-in now can help ensure your money is working as hard as it can for you — while keeping your Centrelink entitlements and aged care fees on track.
