Big changes to pension and deeming rates in September 2025 August 27th, 2025
Big changes to Centrelink are about to hit on September 20. These include a change to the deeming rates as well as a lift in the pension payment rates.
That of course flows through to an increase in the means test thresholds which means if you just missed out on a part-pension, now is a good time to recheck your eligibility.
Pension rates
As you know, government income support payments are indexed twice per year in March and September, always taking effect on the 20th of each month.
While allowance payments are linked directly to the Consumer Price Index (CPI), pensions are increased by either CPI or a special Pensioner and Beneficiary Living Cost Index (PBLCI). Whichever test produces the highest pension is the one used, and this figure is then tested against Male Total Average Weekly Earnings.
This time round, PBLCI wins the race and the single pension will rise by 2.58 per cent, or $29.70 a fortnight, from $1,149.00 to $1,178.70 per fortnight.
For couples, each member will receive an extra $22.40, lifting the fortnightly amount to $880.50 each, or a combined $1,770 per fortnight.
The extra amount also has the effect of lifting the upper cut-off limits for both the income and asset tests.
That translates to many thousands of you becoming eligible for a part pension for the first time.
The new upper income test cut-off limit for a single pensioner will be $2,575.40 a fortnight, which translates to about $66,960 per year. If part of that income is from employment, the upper limit can be up to $78,760 per annum.
For couples, the combined upper limit rises to $3,934 per fortnight, or $102,284 per year. Again, if both of you are working, this limit could be as much as $125,884 per annum.
Refer to Netplan session 4 to remind yourself how Centrelink assesses income. It’s NOT the same as the ATO.
The asset test is the harsher of the two. The September payment increases flow through to the upper cut-off limits, meaning a home-owning Australian couple can now have assets up to $1.074 million and qualify for a part pension. Non-homeowners have $258,000 added to these figures, whether single or as a couple.
These represent a sizeable increase of $10,000 for singles and a combined $15,000 for couples.
And remember, a quirk in the system means someone close to the cut-off levels receives a reasonable minimum amount.
Fortnightly Centrelink pension payments include a base pension and pharmaceutical, telephone and other supplements.
The minimum you can receive if under the cut-off limits is $59.70 for singles, and $45 each (a combined $90 a fortnight) when each member of a couple qualifies.
Also increasing are the Commonwealth Seniors Health Card limits.
From 20 September, singles over 67 with an income below $101,105 can claim a CSHC, and for couples, the combined upper limit increases to $161,788.
Tips
With the deeming rate increase, there’s not a heap you can do to beat the system. That said, chasing the highest rate possible is still the best bet—while avoiding risky “high income” investments that seem to be everywhere on social media at the moment.
canstar.com.au lists all the various savings products that are backed by the Financial Claims Scheme guarantee. You can still get 4.25 per cent at call with one major bank.
We’re also doing some further analysis on guaranteed annuities. Their special means-test treatment means they may start to look more attractive as the deeming rates rise.
Deeming rates
Centrelink’s deeming rates are about to increase, meaning thousands of part-pensioners and some full-pension clients are about to see their fortnightly pension clipped.
Thanks to the COVID pandemic and subsequent federal election promises, the deeming rates had been held artificially low since they were dropped to emergency levels at the start of the pandemic in May 2020.
From 20 September, the lower deeming rate will increase from 0.25 per cent per annum to 0.75 per cent per annum. For singles, the lower 0.75 per cent applies to the first $64,200 of financial assets, and for couples, the first $106,200. Above these levels, the higher deeming rate of 2.25 per cent per annum will also increase by half a per cent to 2.75 per cent.
Under the new income test calculations, a single pensioner with more than $252,000 in financial assets will see a reduction in their pension. The current “magic number” for a full pension is about $308,000 in financial assets before the income test starts to bite.
A couple in an identical financial position would see no change to their pension, but a couple with $450,000 in financial assets will have deemed income of $394.27 per fortnight. That’s $14.27 over the $380-a-fortnight threshold for couples, resulting in a $7.13 reduction.
A couple’s sweet spot before the deemed income from financial assets starts to bite will be about $436,000.
Financial assets for age pensioners include all bank accounts, the value of your shares, managed funds, superannuation, account-based pension funds, cash, bullion, and gifts over certain limits.
Added to the deemed fortnightly income figure are pre-tax wages, foreign pensions and the net income from rental properties.
Another factor could be a lift in the value of your financial assets like shares, managed funds or superannuation balances since the last increase in March. A rise in pensions also triggers a revaluation of these assets, and the increased values will be used in the new deeming calculations.
Remember, the pension outcomes here don’t factor in the effects of the asset means test, which can also have an effect. Centrelink latch onto the means test that pays you the lowest pension. Each thousand dollars over the asset test limits results in a $3-per-fortnight reduction in your pension. For a home-owning single, that limit is $321,500, and for couples, a combined $481,500. Non-homeowners have an additional allowance of $258,000 under the asset test, meaning a non-home-owning retiree with significant financial assets will be more affected by the changed deeming rates.
The other bad news is the increase in deeming rates doesn’t look like stopping there. They are set to increase each time pensions are increased over the next year or so. The next increase is set to occur on 20 March next year.
You can use the table below to work out what your entitlements might be. Remember, whichever test produces the lowest pension is the one Centrelink will latch onto.
Pension access calculation table
| Assessable Assets | Assessable Financial Assets | Singles Asset Tested Pension Homeowner | Singles Asset Tested Pension Non Homeowner | Singles Income Tested Pension * | Combined Couples Asset Tested Pension Homeowner | Combined Couples Asset Tested Pension Non Homeowner | Combined Couples Income tested Pension * |
|---|---|---|---|---|---|---|---|
| $100,000 | $95,000 | $1,178.70 | $1,178.70 | $1,178.70 | $1,777.00 | $1,777.00 | $1,777.00 |
| $150,000 | $142,500 | $1,178.70 | $1,178.70 | $1,178.70 | $1,777.00 | $1,777.00 | $1,777.00 |
| $200,000 | $190,000 | $1,178.70 | $1,178.70 | $1,178.70 | $1,777.00 | $1,777.00 | $1,777.00 |
| $250,000 | $237,500 | $1,178.70 | $1,178.70 | $1,178.70 | $1,777.00 | $1,777.00 | $1,777.00 |
| $300,000 | $285,000 | $1,178.70 | $1,178.70 | $1,161.67 | $1,777.00 | $1,777.00 | $1,777.00 |
| $350,000 | $332,500 | $1,093.20 | $1,178.70 | $1,136.55 | $1,777.00 | $1,777.00 | $1,777.00 |
| $400,000 | $380,000 | $943.20 | $1,178.70 | $1,111.43 | $1,777.00 | $1,777.00 | $1,777.00 |
| $450,000 | $427,500 | $793.20 | $1,178.70 | $1,086.31 | $1,777.00 | $1,777.00 | $1,777.00 |
| $500,000 | $475,000 | $643.20 | $1,123.20 | $1,061.19 | $1,721.50 | $1,777.00 | $1,756.64 |
| $550,000 | $522,500 | $1,178.70 | $973.20 | $1,036.07 | $1,571.50 | $1,777.00 | $1,731.52 |
| $600,000 | $570,000 | $343.20 | $823.20 | $1,010.95 | $1,421.50 | $1,777.00 | $1,706.40 |
| $650,000 | $617,500 | $193.20 | $673.20 | $985.83 | $1,271.50 | $1,777.00 | $1,681.28 |
| $700,000 | $665,000 | $59.70 | $523.20 | $960.71 | $1,121.50 | $1,777.00 | $1,656.16 |
| $750,000 | $712,500 | $0.00 | $373.20 | $935.59 | $971.50 | $1,745.50 | $1,631.04 |
| $800,000 | $760,000 | $0.00 | $223.20 | $910.47 | $821.50 | $1,595.50 | $1,605.92 |
| $850,000 | $807,500 | $0.00 | $73.20 | $885.35 | $671.50 | $1,445.50 | $1,580.80 |
| $900,000 | $855,000 | $0.00 | $0.00 | $860.23 | $521.50 | $1,295.50 | $1,555.68 |
| $950,000 | $902,500 | $0.00 | $0.00 | $835.11 | $371.50 | $1,145.50 | $1,530.56 |
| $1,000,000 | $950,000 | $0.00 | $0.00 | $809.99 | $221.50 | $995.50 | $1,505.44 |
| $1,050,000 | $997,500 | $0.00 | $0.00 | $784.87 | $90.00 | $845.50 | $1,480.32 |
| $1,100,000 | $1,045,000 | $0.00 | $0.00 | $759.75 | $0.00 | $695.50 | $1,455.20 |
| $1,150,000 | $1,092,500 | $0.00 | $0.00 | $734.63 | $0.00 | $545.50 | $1,430.08 |
| $1,200,000 | $1,140,000 | $0.00 | $0.00 | $709.51 | $0.00 | $395.50 | $1,404.96 |
| $1,250,000 | $1,187,500 | $0.00 | $0.00 | $684.39 | $0.00 | $245.50 | $1,379.84 |
| $1,300,000 | $1,235,000 | $0.00 | $0.00 | $659.27 | $0.00 | $95.50 | $1,354.72 |
| $1,350,000 | $1,282,500 | $0.00 | $0.00 | $634.15 | $0.00 | $0.00 | $1,329.60 |
* Assumes 95% of all assets held as financial assets and thus, subject to income test deeming
eg. Toni is a single home owner with assets totalling $300,000 over and above the family home. Under the asset test she would receive $1,178.70 which is the full rate but under the income test (assuming 95% of the $300,000 or $285,000 are financial assets), she receives $1,161.67 per fortnight.
Because this is the lower of the two means test outcomes, (asset test or income test) she will receive an income tested part pension.