Rising Deeming Rates: What Does It Mean?

Deeming rates are increasing on 20 September 2025, so what does that mean and how might it affect you?

What are Deeming Rates?

Deeming rates are used by Centrelink to estimate the income you earn from financial assets such as:

• Bank accounts

• Shares

• Superannuation

• Managed investments

Rather than tracking actual earnings, the government applies a standard rate to your assets to simplify income assessments for pensions and aged care. This means your actual income doesn’t matter as Centrelink uses deemed income to calculate your entitlements and fees.

Deeming Rates: What are the increases?

Rising deeming rates carry different implications, especially if you're receiving the Age Pension or accessing aged care services. From 20 September 2025, the new deeming rates will be:

• Singles:

  • 0.75% on the first $64,200

  • 2.75% on amounts above that

• Couples (combined):

  • 0.75% on the first $106,200

  • 2.75% on amounts above that

These rates are up from the previous 0.25% and 2.25%, which were frozen during the pandemic to protect retirees from low returns.

Deeming Rates and Part Pensioners

All pensioners will receive a boost to their payments on 20th September due to indexation to the Age Pension. However, some part pensioners will have this increase offset by the lift to deeming rates, which may reduce pension payments under the income test. This is because:

• the new deeming rates are applied, increasing deemed income, even if actual income hasn’t changed.

• higher deemed income may push up into the higher income test threshold, reducing the fortnightly pension.

Some part pensioners may lose eligibility for the Age Pension altogether if their deemed income exceeds the income test limits. This is especially relevant for those close to the cut-off thresholds.

Deeming Rates and the Impact on Home Care Fees

For self-funded retirees accessing Home Care Packages, the means-tested care fee is calculated based on Centrelink’s deemed income, not your actual earnings. This means:

• Even if your investments are underperforming, Centrelink assumes you’re earning more.

• With the increase in deeming rates, your deemed income may rise, potentially pushing you into a higher fee bracket.

• A modest increase in deemed income could mean a jump in your monthly contribution, even if your real income hasn’t changed.

  
  

Deeming Rates and Residential Aged Care for Self Funded Retirees

Refundable Accommodation Deposits are assessable under Centrelink’s deeming rules. This means:

• Centrelink assumes you're earning income from your financial assets at the new higher deeming rates.

• This deemed income is used to calculate your means-tested care fee. So, even if your actual income is low, the increase in deeming rates can push your assessed income higher, resulting in higher ongoing care fees

  
  
  
  

Final Thoughts

While the increase in deeming rates may lead to higher aged care fees or reduced part pensions for some, the boost in Age Pension rates offers some relief for full-rate pensioners. For self-funded retirees, the impact on home care fees can be particularly significant, making it more important than ever to understand how deemed income affects your contributions.

Plan ahead and seek expert financial advice from a Retirement and Aged Care Specialist Financial Planner to understand how these changes affect your entitlements and aged care costs.