The Federal Budget 2025 has introduced a significant policy change that will benefit Centrelink pensioners. A crucial component of this is the extension of the deeming rates freeze until July 1, 2026.
This decision is aimed at safeguarding elderly Australians from potential reductions in their Age Pension due to rising interest rates and cost-of-living pressures.
Whether you’re already retired, nearing retirement, or simply planning your financial future, understanding the implications of this policy is essential.
In this article, we’ll break down the key details of this decision, providing expert insights, up-to-date information, and practical tips to help you make the most of this change.
What is the Deeming Rates Freeze?
Key Policy Update
The deeming rates freeze ensures that Centrelink pensioners will continue to receive financial support without the risk of lower pension payments due to rising interest rates.
The freeze will last until July 1, 2026, giving over 460,000 Australian pensioners a sense of financial stability during a period of economic uncertainty.
What Are Deeming Rates?
Deeming rates are the assumed rates at which the government estimates income from financial assets, regardless of the actual income earned. These rates are critical for determining eligibility and the amount of Age Pension benefits pensioners receive.
Examples of Financial Assets
- Savings and transaction accounts
- Term deposits
- Shares
- Managed funds
- Superannuation (if over Age Pension age)
These assets are deemed to generate income, and this income is used to assess eligibility for the Age Pension.
How Does the Deeming Rates Freeze Affect Pensioners?
By freezing the deeming rates, the government ensures that pensioners’ entitlements remain stable despite any economic fluctuations, particularly those caused by interest rate hikes. For pensioners, this means:
- Stability in their pension payments.
- Simplicity in financial planning.
- Protection from being penalized for savings.
Current Deeming Rates (2025)
| Target Group | Deeming Rate |
|---|---|
| Singles (up to $62,600) | 0.25% |
| Singles (above $62,600) | 2.25% |
| Couples (combined up to $103,800) | 0.25% |
| Couples (combined above $103,800) | 2.25% |
These rates, which have remained unchanged since May 2020, will now remain the same until at least July 1, 2026.
Additional Budget 2025 Measures for Pensioners
Alongside the deeming rates freeze, the Federal Budget 2025 introduces other measures to support pensioners and low-income Australians.
1. Lower Pharmaceutical Costs
From January 1, 2026, the cost of PBS (Pharmaceutical Benefits Scheme) medicines will be capped at $25 per medicine, down from $31.60. This will provide significant savings, especially for those relying on multiple prescriptions.
2. Energy Bill Relief
Pensioners and low-income households will receive an annual rebate of approximately $300 on their energy bills. This rebate is part of a broader effort to reduce the burden of rising utility costs.
3. Medicare Enhancements
The Federal Budget 2025 also allocates funds for expanded healthcare services, including:
- Increased bulk billing incentives for General Practitioners (GPs)
- Investments in telehealth services
- Programs targeting preventative health for chronic conditions
4. Rent Assistance Increase
For pensioners renting privately, there will be an increase in Commonwealth Rent Assistance, helping those facing rising rent costs.
Practical Tips: Maximizing Your Benefits
If you’re a Centrelink pensioner or planning to apply, here are some actionable steps you can take to make the most of these changes:
1. Review Your Centrelink Records
Ensure your assets and income details are accurate and up-to-date. Mistakes could result in overpayments or reduced benefits.
2. Understand the Impact on Investments
If you have financial investments, consult with a financial planner to understand how deeming applies and reduce the impact on your pension payments.
3. Claim All Eligible Benefits
Don’t miss out on other benefits you may be eligible for, such as:
- Pensioner Concession Cards
- Discounts on utilities, public transport, and healthcare
- Car registration waivers in some states
4. Consult a Financial Adviser
A Centrelink-savvy financial adviser can guide you through complex rules and help you maximize your benefits, ensuring you’re well-prepared for any future changes.
5. Stay Informed
Stay updated by subscribing to government newsletters or checking resources like:
- Services Australia
- MoneySmart
- MyGov
The Federal Budget 2025 introduces a significant deeming rates freeze for Centrelink pensioners, ensuring that they are shielded from potential cuts in their Age Pension due to economic pressures like rising interest rates.
Alongside this, the budget provides other vital benefits such as lower pharmaceutical costs, energy bill relief, and enhanced healthcare services. By staying informed and seeking professional advice, pensioners can take full advantage of these supportive measures.
FAQs
What are deeming rates?
Deeming rates are the government’s assumptions about the income you earn from financial assets, used to determine your eligibility for the Age Pension.
Who will benefit from the deeming rates freeze?
Over 460,000 Centrelink pensioners are expected to benefit from the deeming rates freeze.
How much will the pharmaceutical cost cap be reduced?
The cost of medicines under the Pharmaceutical Benefits Scheme (PBS) will be capped at $25 per medicine starting January 1, 2026.
How can pensioners benefit from energy bill relief?
Pensioners will receive an annual rebate of $300 to help offset rising energy costs.