Millions of Australians who receive Centrelink payments will notice larger amounts in their accounts starting today. The increase affects various welfare recipients across the country. But the news is not entirely positive for everyone involved. Pensioners face a mixed situation with these changes. While their base payments are going up they will also experience higher deeming rates for the first time in five years. This marks a significant shift in how the government calculates pension entitlements. Deeming rates determine how much income the government assumes pensioners earn from their financial investments. When these rates increase it can reduce the overall pension payment some people receive. The last time deeming rates changed was half a decade ago. The payment increases come as part of regular indexation adjustments. These adjustments help welfare payments keep pace with rising living costs. The government reviews and updates these rates periodically based on economic indicators. For many recipients the higher payments will provide some relief amid ongoing cost of living pressures. Everyday expenses like groceries and utilities have been climbing steadily. The extra money in each payment could help cover these increased costs. However pensioners with savings or investments need to pay attention to how deeming rates affect their situation. Those with larger amounts in savings accounts or other financial assets may see their pension reduced. The government assumes these assets generate a certain level of income regardless of actual returns. The dual nature of these changes means some pensioners might not see as much benefit as other Centrelink recipients. While their base rate increases the deeming rate adjustment could offset some of those gains. Each person’s situation will depend on their individual financial circumstances.
More than five million Australians will benefit from the government’s twice-yearly indexation that happens in March and September. This includes 2.6 million age pensioners & those receiving JobSeeker ABSTUDY, Parenting Payment, Commonwealth Rent Assistance, Disability Support Pension and Carer Payment.
What Are Deeming Rates?
Deeming rates have stayed unchanged since 2020 but they went up today. This change will affect around 771,000 Centrelink recipients who have their payment amounts determined by their deemed income. The adjustment means that these recipients will see modifications to how much money they receive from Centrelink. The government uses deeming rates to estimate how much income people earn from their financial investments. This estimated income then influences the final payment amount that eligible individuals receive through the Centrelink system. People who hold savings accounts or other financial assets are subject to these deeming calculations. The government assumes these assets generate a certain level of return regardless of what they actually earn. When deeming rates increase it means the government assumes your investments are making more money. This higher assumed income can reduce your Centrelink payments because the system thinks you have more financial resources available. The 771000 affected recipients include age pensioners and other welfare payment receivers who have assessable assets. Many of these people rely heavily on their Centrelink payments to cover basic living expenses. Even small changes to their payment amounts can significantly impact their ability to manage household budgets & pay for necessities like food and utilities.
How Much Will Centrelink Payments Increase?
- Age Pension: Maximum fortnightly payment for singles increases to $1,178.70, up $29.70.
- Partnered Pension: Maximum fortnightly payment increases to $888.50 each, up $22.40.
- JobSeeker: Rate for singles increases to $793.60, up $12.50; partnered rate increases to $726.50 each, up $11.40.
- ABSTUDY: Rate increases to $793.60 per fortnight, up $12.50.
- Parenting Payment: Maximum fortnightly rate increases to $1,039.70, up $16.20; partnered parents’ rate increases to $734.30, up $11.40.
Deeming Rates Changes
The government has kept deeming rates unchanged since 2020. Now that inflation is slowing down the government plans to raise these rates step by step so they match what people actually earn on their investments today.
- For assets under $64,200 (singles) or $106,200 (couples), the deeming rate is now 0.75%, up from 0.25%.
- For assets over these amounts, the deeming rate is now 2.75%, up from 2.25%.
What Does This Mean for Pensioners?
The government uses deeming rates to estimate how much income people make from their financial assets. These rates affect your income test results regardless of what you actually earn from your investments. Deeming rates apply to various financial assets including savings accounts term deposits, shares, & managed funds. The government treats these assets as if they earn a set percentage each year. This assumed income then gets counted when calculating your eligibility for government payments and benefits. There are two different deeming rates that apply depending on how much you have in financial assets. A lower rate applies to the first portion of your assets, while a higher rate applies to amounts above that threshold. The government reviews and adjusts these rates periodically to reflect changes in the broader economy and interest rate environment. Understanding deeming rates matters because they determine your deemed income rather than your actual income from investments. If your investments earn less than the deeming rate, you might be disadvantaged because the government assumes you earned more than you did. Conversely if your investments perform better than the deeming rate, you benefit because your assessed income stays lower than your actual returns. The thresholds where the different rates apply vary depending on whether you are single or part of a couple. Singles have a lower threshold than couples combined. These thresholds also receive periodic adjustments to account for inflation and economic conditions. Financial planning becomes important when deeming rates come into play. Some people structure their assets differently to minimize the impact of deemed income on their government benefits. Others focus on investments that might generate returns above the deeming rate to maximize their actual income while keeping their assessed income steady.
Major Centrelink change sparks $64,200 warning for Aussie pensioners after five year freeze
About 771000 people who get government welfare payments & also earn money from other sources will be affected by these changes. This group includes around 460,000 aged pensioners along with 96,000 people on JobSeeker and 62,000 people receiving disability support pensions.
Other Age Pension Changes
- Income threshold for part pension increases to $2,575.40 for singles, up $59.40.
- Income threshold for couples increases to $3,934, up $89.60.
- Asset threshold for singles increases to $714,500 (homeowners) and $972,500 (non-homeowners), both up $10,000.
- Asset threshold for couples increases to $1,074,000 (homeowners) and $1,332,000 (non-homeowners), both up $15,000.
Singles who have taxable incomes under $101,105 and couples earning less than $161768 might qualify for a Commonwealth Seniors Health Card from September 20 onward. People who meet these income requirements can apply for this card through the government system. The card provides access to cheaper prescription medications and bulk billed doctor visits at participating medical centers. Eligible seniors also receive discounts on various health services across the country. The income thresholds apply to adjusted taxable income which includes several types of earnings and financial gains. This encompasses employment income along with investment returns and certain government payments. Superannuation withdrawals and some other retirement income sources also count toward the total. Applicants must be at least pension age to qualify for the card even if they meet the income criteria. They also need to satisfy residency requirements by living in Australia as permanent residents or citizens. The application process involves providing documentation about income and personal circumstances. Cardholders can access reduced costs for medicines listed on the Pharmaceutical Benefits Scheme. They pay lower amounts at pharmacies compared to general patients without concession cards. Medical practitioners who bulk bill also provide free consultations to card holders at their clinics. The card does not provide direct cash payments like pension benefits do. Instead it offers savings on essential health expenses throughout the year. Many seniors find these savings helpful for managing their healthcare costs on fixed retirement incomes. Renewal of the card happens automatically in most cases when income levels remain within the limits. Cardholders must notify authorities if their financial situation changes significantly. This ensures they continue receiving benefits only while they remain eligible under program rules.
