Centrelink Boost 2025- $450M Federal Budget Move Benefits 460,000 Australian Pensioners With Deeming Rate Freeze

In a significant move to support pensioners amid rising living costs, the Australian government has announced a freeze on deeming rates for another year as part of the 2025 Federal Budget.

This decision is set to benefit approximately 460,000 age pensioners, allowing them to retain more of their Centrelink payments.​

Understanding Deeming Rates

Deeming rates are the assumed rates of return that the government expects individuals to earn on their financial assets, such as bank accounts, shares, and superannuation.

These rates are used to calculate income for means-tested government benefits, including the age pension. If actual earnings exceed the deemed rate, the additional income isn’t counted in the assessment, potentially leading to higher pension payments.​

Current Deeming Rates and Thresholds

As of 2025, the deeming rates and thresholds are structured as follows:​

StatusFinancial Assets Up ToDeemed RateFinancial Assets AboveDeemed Rate
Single$62,6000.25%Over $62,6002.25%
Couple$103,800 (combined)0.25%Over $103,800 (combined)2.25%

These thresholds are indexed annually on July 1 to reflect changes in the cost of living.​

Impact of the Deeming Rate Freeze

The decision to maintain the current deeming rates for an additional year means that pensioners’ income from financial assets will continue to be assessed at these lower rates.

This approach ensures that pensioners can retain more of their Centrelink payments, providing financial relief amid economic challenges.​

Financial Implications for the Government

While this measure offers direct benefits to pensioners, it represents a significant expenditure for the government.

It’s estimated that a 1% increase in deeming rates could save the budget approximately $1.8 billion over four years, equating to about $450 million annually.

By choosing to freeze the rates, the government is foregoing these potential savings to prioritize support for retirees.​

Additional Budget Measures Benefiting Pensioners

Beyond the deeming rate freeze, the 2025 Federal Budget introduces other initiatives aimed at alleviating financial pressures on pensioners:​

  • Reduced Pharmaceutical Costs: The government plans to lower the cost of Pharmaceutical Benefits Scheme (PBS) medicines to a maximum of $25 per script starting January 1, 2026. This reduction aims to make essential medications more affordable for all Australians.​
  • Energy Bill Relief: An extension of electricity rebates has been announced, providing continued assistance to households in managing rising energy costs.​
  • Medicare Enhancements: Significant funding has been allocated to expand Medicare services, aiming to improve access to healthcare and reduce out-of-pocket expenses for medical visits.​

Looking Ahead: Future Considerations

While the current freeze offers immediate relief, it’s essential for pensioners to stay informed about potential changes in the future.

The deeming rate freeze is set to continue until June 30, 2025. After this period, rates may be adjusted to reflect prevailing economic conditions, which could impact pension calculations.​

These measures reflect the government’s commitment to supporting pensioners and addressing cost-of-living challenges through targeted financial policies.

FAQs

What are deeming rates, and how do they affect my pension?

Deeming rates are the assumed rates of return the government expects on your financial assets. They are used to assess your income for means-tested benefits like the age pension. Lower deeming rates can result in a lower assessed income, potentially leading to higher pension payments.​

How long will the current deeming rates remain in effect?

The deeming rates are frozen until June 30, 2025. Any changes beyond this date will depend on future government decisions and economic conditions.​

Will the reduction in PBS medicine costs apply to all medications?

The reduction to a maximum of $25 per script applies to medicines listed under the Pharmaceutical Benefits Scheme (PBS). Not all medications are covered under the PBS, so it’s advisable to check if your prescriptions are included.​

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