Deeming rates are about to go up after half a decade of being frozen, and it could affect how much Centrelink you receive. (Source: Getty) <\/p>\n
The government has revealed it will begin changing deeming rates<\/a> for pensioners and other Centrelink recipients<\/a>. Deeming rates<\/a> are the rates of return the government assumes people earn on financial assets, including shares, superannuation<\/a> and bank accounts.<\/p>\n They have been frozen at 0.25 per cent and 2.25 per cent, respectively, since 2020. But Social Services Minister Tanya Plibersek has revealed this is about to change.<\/p>\n \u201cAs Australians begin to feel the positive impacts of inflation easing<\/a>, the government will now gradually return deeming rates to pre-pandemic settings<\/a>,\u201d she said.<\/p>\n \u201cThat is, to reflect rates of return that pensioners and other payment recipients can reasonably access on their investments<\/a>.\u201d<\/p>\n Deeming rates kick in at 0.25 per cent and peak at 2.25 per cent<\/p>\n They impact means testing for Centrelink payments, including the Age Pension<\/a>, JobSeeker and parenting payments.<\/p>\n For singles, the first $62,600 of your financial assets has a deemed rate of 0.25 per cent.<\/p>\n Anything over $62,600 is deemed to earn 2.25 per cent.<\/p>\n Do you have a story? Email stew.perrie@yahooinc.com<\/p>\n For couples where at least one person gets a pension, the first $103,800 of your combined assets has a deemed rate of 0.25 per cent. Anything over $103,800 is deemed to earn 2.25 per cent.<\/p>\n Centrelink uses this method to work out your eligibility for certain payments that takes into account your future income as well as other streams of money like superannuation.<\/p>\n There are a little more than 900,000 people who receive government welfare and who have income from other sources that are affected by deeming rates.<\/p>\n That includes about 460,000 aged pensioners, 143,000 on JobSeeker payments and 120,000 on parenting payments.<\/p>\n The government froze deeming rates at the start of the decade while the country was in the grips of the pandemic.<\/p>\n The rate is typically tied to the Reserve Bank of Australia’s (RBA) official cash rate<\/a>.<\/p>\n In mid-2022, the central bank began an interest rate-hiking cycle, which saw the cash rate jump from the record low of 0.10 per cent to a 13-year high of 4.35 per cent.<\/p>\n As a result, the government kept deeming rates frozen to prevent people from suffering a double hit to their finances.<\/p>\n But headline inflation has gradually been coming down from its December 2022 peak of 7.8 per cent to 2.1 per cent at the June 2025 quarter.<\/p>\n Story Continues <\/p>\n Interest rates have also fallen three times this year<\/a> and could drop again in November<\/a>, which would see the cash rate fall 1 per cent in 2025.<\/p>\n Plibersek said the lower deeming rate will rise to 0.75 per cent from September 20.<\/p>\n This will apply to financial assets under $64,200 for singles, and $106,200 for a couple’s combined assets.<\/p>\n The upper rate will rise in a similar 0.5 per cent increment to 2.75 per cent for assets above both thresholds.<\/p>\n The Social Services Minister indicated this will be the first of a series of phased increases in the deeming rate.<\/p>\n September 20 will also be the date that certain Centrelink payments go up due to indexation<\/a>.<\/p>\n After that, the decision to raise, lower, or hold deeming rates will be governed by the Australian Government Actuary.<\/p>\n Plibersek said the body will be able to advise the government on the “most appropriate rate” that reflects current economic conditions, but there will still be some oversight.<\/p>\n \u201cThe government will retain the power to make adjustments, including during exceptional circumstances or events,” she added.<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n Overall inflation has been on a downward trajectory ever since it hit a peak of 7.8 per cent in December 2022. (Source: ABS) <\/p>\n