In a major budget win for older Australians, the Federal Government has delivered a powerful boost for around 460,000 pensioners, locking in a $450 million support package through a key policy shift.
The 2025 Federal Budget includes an extended freeze on Centrelink deeming rates, ensuring that retirees and low-income earners get to keep more of their benefits during a time of financial pressure.
What Is the Deeming Rate and Why It Matters
The deeming rate is used by the government to calculate how much income pensioners are “deemed” to earn from their financial assets—such as savings accounts, shares, and term deposits. This deemed income impacts Age Pension and other means-tested Centrelink payments.
Normally, these rates would rise in line with interest rate hikes. However, the government has decided to freeze deeming rates at their current low levels for an additional year, despite the official cash rate being over 4%.
Current Deeming Rates (Frozen Until Mid-2026)
| Deeming Rate | Thresholds |
|---|---|
| 0.25% (Lower rate) | Applies to assets up to $60,400 (singles) or $100,200 (couples) |
| 2.25% (Upper rate) | Applies to assets over these thresholds |
This means that retirees can earn more interest on their savings without affecting their pension payments, putting extra cash back into their pockets.
How the $450 Million Package Helps Pensioners
The freezing of deeming rates is expected to inject $450 million back into the hands of approximately 460,000 pensioners.
These savings come from preventing a potential drop in fortnightly payments that would have occurred if the rates were adjusted upward in line with interest rates.
This initiative ensures financial stability and reduces income stress for retirees, especially during a time when cost-of-living pressures—including food, fuel, and rent—continue to rise across the country.
Other Budget Wins for Pensioners
The 2025 Budget includes several additional benefits aimed at supporting pensioners:
- Reduced Medication Costs
Starting January 1, 2026, pensioners will pay a maximum of $25 per PBS-listed prescription, saving hundreds annually for those on regular medications. - Energy Bill Relief
A $150 electricity rebate will help eligible households manage rising power costs, providing direct relief on energy bills. - Boosted Bulk Billing
An $8.5 billion investment into the public health system aims to increase access to bulk-billing GP services, helping older Australians avoid high out-of-pocket costs for medical visits.
Why This Matters Now
With inflation still placing pressure on household budgets, older Australians—many of whom live on fixed incomes—are feeling the pinch.
By keeping deeming rates low, the government helps ensure more stable Centrelink payments and enables pensioners to hold onto more of their hard-earned savings.
This decision also removes uncertainty for retirees who may have otherwise cut back on spending or dipped further into their savings due to a possible pension reduction.
The $450 million Centrelink boost for 460,000 pensioners is a welcome development in the 2025 Federal Budget. By freezing deeming rates and delivering targeted relief in healthcare, energy, and prescription costs, the government is offering a much-needed financial cushion to older Australians.
This budget move not only protects the financial security of pensioners but also sends a message of respect and support for those who have contributed so much to society.
FAQs
How do deeming rates affect my Age Pension?
Deeming rates help determine how much income Centrelink thinks you earn from your assets. The lower the deeming rate, the less income you’re assessed as having, which means higher pension payments.
How long will the deeming rate freeze last?
The deeming rates will remain frozen until mid-2026, helping pensioners benefit from current low-rate calculations.
What other support is available to pensioners in the 2025 Budget?
Additional support includes reduced prescription costs, energy bill rebates, and better access to bulk-billing GPs—all aimed at easing the cost of living for seniors.