The Federal Budget 2025 brings significant relief for Centrelink pensioners by extending the deeming rates freeze until July 1, 2026.
This move aims to shield pensioners from the impact of rising interest rates and the ongoing cost-of-living pressures, which could otherwise result in reduced Age Pension payments.
Overview of the Federal Budget 2025 Measures
The deeming rates freeze is one of the key provisions in the Federal Budget 2025, directly benefiting over 460,000 Centrelink age pensioners.
By keeping the deeming rates unchanged, the government is offering stability and protection against the economic challenges faced by senior Australians.
Key Details
| Feature | Details |
|---|---|
| Policy Update | Deeming rates freeze until July 1, 2026 |
| Target Group | ~460,000 Centrelink pensioners |
| Current Deeming Rates | 0.25% on lower threshold, 2.25% on upper |
| Threshold for Singles | $62,600 |
| Threshold for Couples | $103,800 |
| Additional Budget Measures | PBS medicine cost reduction, energy bill relief, Medicare expansion |
| Official Source | Services Australia |
What Are Deeming Rates?
Deeming rates are used by the government to estimate the income from financial assets. These assumptions help determine eligibility for government payments like the Age Pension.
Read More: $1,000 Pay Rise For Eligible Australian Citizens In 2025- Check Your Eligibility And Payment Date
Examples of Financial Assets
- Savings and transaction accounts
- Term deposits
- Shares
- Managed funds
- Superannuation (for individuals over the Age Pension age)
How the System Works
The deemed income is calculated based on the value of your assets. This income is then used in the income test, one of the two key eligibility tests for Centrelink benefits.
Example
If you’re a single pensioner with $80,000 in financial assets, the breakdown would be as follows:
- The first $62,600 earns 0.25%, which is $156.50 annually.
- The remaining $17,400 earns 2.25%, which is $391.50 annually.
- Total deemed annual income = $548
This amount is used to calculate your pension entitlement.
Why the Deeming Rates Freeze Matters
The deeming rates freeze is crucial in today’s financial climate where interest rates are rising in response to inflation.
Without this freeze, an increase in deeming rates would have resulted in reduced pension payments for many. By keeping the rates stable, the government ensures that pensioners’ benefits remain secure.
Key Benefits
- Stability: The freeze provides a buffer against fluctuations in deeming rates, ensuring stable pension payments.
- Simplicity: Pensioners can plan their finances with certainty, knowing that their payments won’t change unexpectedly.
- Support: The freeze prevents pensioners from losing their entitlements due to increasing interest rates.
Breakdown of Current Deeming Rates (2025)
The deeming rates have been frozen at the following levels since May 2020 and will remain unchanged until at least July 1, 2026:
For Singles
- 0.25% on the first $62,600 of financial assets
- 2.25% on the remaining amount
For Couples (combined)
- 0.25% on the first $103,800 of financial assets
- 2.25% on the remaining amount
This freeze ensures a consistent financial framework for pensioners.
Other Federal Budget 2025 Measures for Pensioners
In addition to the deeming rates freeze, the Federal Budget 2025 includes several other key measures to support senior Australians:
1. Lower Pharmaceutical Costs
Starting January 1, 2026, the Pharmaceutical Benefits Scheme (PBS) will reduce the prescription cost cap to $25 per medicine (down from $31.60). This will benefit pensioners who rely on medications, potentially saving them hundreds of dollars annually.
2. Energy Bill Relief
The government will continue offering electricity rebates, with pensioners and low-income households receiving an average annual rebate of $300. This rebate will help offset rising utility costs.
3. Medicare Enhancements
To make healthcare more accessible, the budget includes:
- Expanded bulk billing incentives for GPs
- Increased investment in telehealth
- Preventative health programs for chronic conditions
4. Rent Assistance Increase
An increase in Commonwealth Rent Assistance will provide additional support to pensioners who are renting, helping them cope with rising housing costs.
Practical Tips for Maximizing Your Entitlements
To fully benefit from the Federal Budget 2025 changes, here are some practical tips for pensioners and pre-retirees:
1. Review Your Centrelink Records
Ensure all your financial information is accurate and up to date. Mistakes or outdated data can result in overpayments or reduced benefits.
2. Understand How Deeming Affects Investments
If you have financial investments, seek advice from a financial planner to minimize the impact of deemed income.
3. Claim All Eligible Benefits
In addition to your Age Pension, you may be entitled to other benefits, such as:
- Concession cards
- Discounts on utilities, public transport, and healthcare
- Car registration and license fee waivers in some states
4. Speak to a Financial Adviser
A Centrelink-savvy financial adviser can guide you through complex rules and help you maximize your entitlements.
5. Stay Up to Date
Subscribe to government newsletters or check platforms like Services Australia and MyGov to stay informed about any policy changes that may affect you.
The Federal Budget 2025 introduces crucial support measures for Centrelink pensioners, including the extension of the deeming rates freeze until 2026.
This stability, along with additional benefits such as lower prescription costs and energy bill relief, will provide much-needed financial security for Australia’s aging population. By staying informed and reviewing your Centrelink records, pensioners can make the most of these changes and continue to thrive in retirement.
FAQs
What are deeming rates and how do they affect my pension?
Deeming rates estimate the income you earn from financial assets. Centrelink uses these rates to determine how much pension you are entitled to receive.
Who benefits from the deeming rates freeze?
Over 460,000 Centrelink pensioners will benefit from the freeze, ensuring their pension payments remain stable.
What other support measures are included in the Federal Budget 2025?
The budget includes lower prescription costs, energy bill relief, Medicare enhancements, and an increase in rent assistance.