If you’re receiving the Age Pension or other social security payments, you’ve likely heard about changes to “deeming rates” taking effect on 20 September 2025.

Deeming rates are part of how the government calculates your Age Pension and other social security payment entitlements. When you have financial assets like savings accounts, term deposits, shares or managed funds, the government and Services Australia don’t assess your actual investment returns for pension purposes. Instead, they assume (or “deem”) that your investments earn a set rate of return, regardless of what they actually earn.

There are two deeming rates: a lower rate that applies to the first $64,200 of your financial assets if you’re single (the first $106,200 for couples), and an upper rate that applies to amounts above that threshold.

From 20 September 2025, these rates each increase by 0.5%: the lower deeming rate will rise from 0.25% to 0.75%, and the upper rate from 2.25% to 2.75%.This marks the end of a freeze that’s been in place since May 2020, when rates were reduced as an emergency COVID-19 measure.

Not everyone will see changes to their pension payments. You’ll only be affected if you’re currently receiving an income-tested rate of pension (rather than an assets-tested rate) and your total income exceeds the income-free area for your payment type.

And here’s some good news: the deeming rate increases coincide with the regular indexation of pension payments on 20 September. Indexation typically increases payment rates to keep pace with cost-of-living changes.

Most people affected by the deeming rate changes won’t actually see their fortnightly payments decrease when both changes are considered together – many will still see a net increase in their payments due to indexation being larger than the deeming rate impact. For example, a single Age Pension recipient with

$200,000 in financial assets and no other income will receive the full indexation increase of $29.70 per fortnight, because the deeming rate change won’t affect their payment rate at this asset level.

If you’re concerned about how these changes might affect you, consider speaking with Services Australia or your financial adviser. Remember, if your investments are earning more than the deeming rates, any excess returns don’t count as income for pension purposes, which is an incentive to seek reasonable returns on your investments.