If you’re receiving the Age Pension, 1 July 2025 could bring some big changes – and not the good kind.
Right now, there’s concern the Federal Government might lift the freeze on deeming rates starting 1 July. These rates are used to estimate the income pensioners earn from their savings and investments. Changes to deeming rates can directly affect how much Age Pension you receive.
Since May 2020, deeming rates have been frozen to help older Australians cope with rising living costs. But unless the government extends this freeze again, many pensioners may see their payments cut – some estimates say single pensioners could lose up to $3,300 a year.
Patricia Sparrow, Chief Executive of COTA Australia, explains:
“The cost of living is already tough for people on fixed incomes. Expecting pensioners to handle an extra loss of over $3,000 a year on top of that is just too much.”
The Age Pension did get a small increase earlier this year, but it’s barely enough to cover small everyday expenses – like a weekly coffee. Sparrow urges politicians to recognise how hard things are and to protect pensioners from further financial pain.
Here’s how deeming rates work: currently, the Government assumes pensioners earn 0.25% interest on the first $62,600 of their financial assets (for singles) and 2.25% on amounts above that. This ‘deemed’ income affects the pension amount.
The freeze on these rates was extended last year to June 30, 2025 – but no announcement was made in the 2025 Budget about extending it further. That means many pensioners could see their payments reduced from 1 July.
Watch this space then.