Age Pension payment changes
Pension indexation and deeming rate changes from 20 September will see pension payments up, down, and steady - depending on your circumstance.
The government has announced changes to Age Pension payments from 20 September 2025, including a lift on the previously frozen deeming rates by 0.5% and an increase to the Age Pension of up to $29.70 for singles and $22.40 each for couples.
National Seniors Australia (NSA) Chief Executive Officer, Chris Grice, said it’s a mixed bag for pensioners.
All pensioners will receive a boost to their payments due to indexation to the Age Pension – the most substantial in two years. However, some part-rate and full-rate pensioners will have this increase offset by the lift to deeming rates, which will reduce pension payments under the income test.
Who is affected and by how much depends on personal circumstances.
NSA estimates that around 180,000 full-rate pensioners will become part-rate pensioners as a result of the 0.5% increase to the upper and lower deeming rates in September. However, many of these people will receive a higher pension payment than before because of the application of indexation. Such is the complex nature of means testing.
The 470,000 part-rate pensioners currently under the income test will have an increase in their payment from indexation offset by a fall in the payment from the deeming rate change. Some will receive an overall increase and others an overall decrease. The exact amount will vary depending on the amount of assets they have, whether they are homeowners or non-homeowners, and whether they have employment income, among other things.
“It is important to acknowledge that the three-year freeze on deeming rates spared pensioners a significant drop in income during a time that interest rates and everyday living costs soared,” Mr Grice said.
“NSA called for a continuation of the freeze with any lift to be modest while waiting for interest rates to fall.”
While the lift on the freeze will not be welcomed, the government has attempted to cushion the impact by aligning changes with indexation to the Age Pension – something that NSA argued should be considered in any move to reset deeming rates. By timing deeming rate changes with indexation, and doing this slowly as interest rates reduce, this avoids what could have been a sharper impact on pensioners.
“We acknowledge the Minister for Social Services, Tanya Plibersek, for her considered and consultative approach to the Age Pension adjustments and look forward to continued discussions with the minister ahead of March when the pension is next indexed,” Mr Grice said.
As we have said consistently and still maintain, changes to deeming rates should be introduced in a measured, incremental, and transparent way.
NSA will continue to advocate for a new method to be introduced to calculate deeming rates.
When we met with the minister, we put forward the argument that the method used prior to the freeze was unfair. We called on the government to use the RBA cash rate to set the upper deeming rate once interest rates fell to a reasonable level – as they are expected to do – and to set the lower deeming rate at 25% of this.
We will continue to advocate for this on behalf of our members, supporters, and all pensioners.
From 20 September 2025, the Age Pension, Veteran Payment, Disability Support Pension, and Carer Payment will receive an increase because of indexation.
The maximum rate of the single-rate Age Pension will rise by $29.70 per fortnight (taking it from $1,149.00 to $1,178.70) and, for couples, by $22.40 each per fortnight (taking the combined payment from $1,732.20 to $1,777.00).
“In respect to indexation, pensioners and other support payment recipients will welcome the increase to their fortnightly payments. It will help give that little bit extra in the pocket and purse for groceries, fuel, and other competing necessities,” Mr Grice said.
“Age Pensioners are still feeling cost-of-living pressures and need to be supported through measures to help improve their standard of living, such as exempting employment income from the Age Pension income test, and NSA will keep fighting for this.”
It is important to remember to notify Centrelink if your financial and personal circumstances change. You are required to inform Centrelink if the value of your financial assets increase. However, you can also ask Centrelink to review your pension if the value of your assets decline. This is important to remember because you could receive an increase in your pension payment under the income or assets test if the value of your assets decline.
