Deeming rates are set to increase again in March, after they were unfrozen from their low levels in September. (Source: AAP)
The Australian government is set to increase deeming rates again in March, following an increase in September. Deeming rates are the rates of return people are assumed to earn on financial assets and they impact calculations for Centrelink payments, including the Age Pension, JobSeeker and Disability Support Pension.
The government is set to adjust the deeming rate in September and March, at the same time as regulation indexation. Deeming rates had previously been frozen at lows since 2020 as an emergency COVID-19 measure, which had been extended until the recent September increase.
“In response to stakeholder feedback, the government committed to change deeming rates at the same time as indexation to increase predictability and reduce impacts for people affected by deeming,” Social Services Minister Tanya Plibersek told The Australian Financial Review.
“The social security system must be grounded in fairness, which is why we adjust supports as the economy changes.”
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The government announced in August that it would be gradually increasing deeming rates to better reflect current rates of return.
From September 20, the deeming rate of 0.75 per cent applies to financial assets under $64,200 for singles and $106,200 for couples combined. Assets over this amount are deemed at a rate of 2.75 per cent.
This is up from the previous rates of 0.25 and 2.25 per cent, respectively, but is still below historical pre-COVID averages and below the official cash rate of 3.60 per cent.
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Social Services Minister Tanya Plibersek said the government committed to change deeming rates at the same time as indexation, which happens in March and September. (Source: AAP)
The Australian Government Actuary is responsible for recommending future deeming rates and will advise the government on the most appropriate rate, based on returns that pensioners and other recipients can reasonably access on their investments.
However, the government will still retain the power to make adjustments, including during exceptional circumstances or events.
One government source told The Australian Financial Review it was all but certain deeming rates would increase again in March.
Deeming rates are used to work out the income people earn on their financial assets, which include things like shares, superannuation and bank accounts.
This then impacts calculations for Centrelink payments.
The rates are assumed regardless of what your financial assets actually earn, so anything you receive above the rate isn’t counted in your income test.
When deeming rates go up, the government assumes you are earning more from your assets (even if you’re not), and this may result in lower payments. But the idea is that by increasing rates at the same time as indexation, this will help reduce the impact.
Around 771,000 people who receive income support payments have their rate affected by deemed income, as of June 2025.
Age pensioners make up about 60 per cent of recipients impacted by deeming and the government notes they tend to experience the “largest impact” from deeming on their payment rates.
That’s because they tend to have more financial assets than those on other income support payments.
Those impacted include about 460,000 aged pensioners, 96,000 on JobSeeker payments, 62,000 disability support pension recipients, and 57,000 Parenting Payment single recipients.
It come ahead of a number of Centrelink payment rates being indexed from January 1, including Youth Allowance, Austudy, ABSTUDY, Youth Disability Support Pension and Carer Allowance.
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