Pensioners face $3,300 Centrelink shock amid cost-of-living squeeze
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Imagine suddenly losing $3,300 a year from your Age Pension. For thousands of older Australians, that frightening prospect is on the horizon, thanks to a looming Centrelink change that advocates warn will hit like a tonne of bricks.
'It would just pile on more pain,' one seniors’ advocate warns, for retirees already stretched thin by rising prices. What’s behind this $3,300 scare, who would be affected, and why is it happening now?
Here’s a deep dive into the issue – with a dash of Aussie candour and plenty of empathy for those who’ve earned their retirement but might be in for a rude shock.
Right now, those rates are frozen at historic lows – the first $62,600 of a single pensioner’s financial assets is deemed to earn 0.25 per cent, and anything above that at 2.25 per cent (The deeming rate danger spot).
This freeze has been in place since 2020 to shield seniors during the pandemic and beyond, and it was extended again in 2024.
In fact, the last federal budget confirmed the freeze would continue until 30 June 2025, a move that left a typical single-age pensioner $3,300 a year better off than they’d be if deeming had kept pace with surging interest rates (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green).
But here’s the catch: the freeze expires on 1 July 2025. If it’s not extended, deeming rates could jump back up to more 'normal' levels (remember, the Reserve Bank’s cash rate is around 4 per cent these days).
And when those deeming rates rise, pension payments fall.
The government will effectively assume pensioners are earning more from their savings and trim their Age Pension accordingly.
How much trim are we talking about? Up to $3,300 less per year for some single pensioners, according to modelling by seniors’ groups (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green).
That’s about $126 less in the fortnightly pension – no small sum when you’re on a fixed income.
For context, the full single-age pension is about $1,149 per fortnight (≈$29,874 per year) (Age Pension rates (March 2025 to September 2025)), so $3,300 is more than 11 per cent of an entire year’s income for someone surviving on the pension alone.
It mainly targets 'part-pensioners' – retirees who have modest investments or nest eggs that are small enough to still get a pension, but large enough that the income test (with deeming) reduces their payment (Fair and consistent deeming rates - National Seniors Australia) (The deeming rate danger spot).
There are a lot of people in this boat. Roughly 660,000 aged pensioners currently have their pension determined by the income test (i.e. subject to deeming) rather than the asset test (Fair and consistent deeming rates - National Seniors Australia).
In total, about 450,000 older Australians on the Age Pension could see their payments drop if deeming rates rise (Labor and Coalition urged to fess up on deeming rate plans - AFR).
And it’s not just the Age Pension – Disability Support Pension and Carer Payment recipients (essentially anyone on a Centrelink pension payment with financial assets) use the same deeming rules.
All up, close to 900,000 welfare recipients nationally could have their benefits trimmed when the freeze lifts (Labor and Coalition urged to fess up on deeming rate plans - AFR).
As National Seniors Australia bluntly put it, 'hundreds and thousands of aged pensioners will lose money off their benefits' come July if nothing is done (Norma isn’t sure if she can afford to retire as market turmoil hits Australians’ super savings | Superannuation | The Guardian).
To be clear, no one is literally taking money out of a pensioner’s wallet. What happens is that as deemed income goes up, the pension paid by Centrelink goes down (because the system thinks you have more private income to live on).
Many part-pensioners could see their fortnightly Centrelink deposit shrink. It’s essentially a cut by stealth – using an administrative tweak to reduce entitlements. And many retirees might not even realise it’s coming.
'Many people assume their fortnightly Age Pension will stay the same... but this shift could make a real difference in how much you actually receive,' a retirement expert warns (The deeming rate danger spot).
For example, a single retiree homeowner with around $300k in assets today is under the asset threshold yet currently loses a small amount of their pension due to deeming; if deeming rates rise, that loss will grow.
And a single non-homeowner right at the asset limit (around $566k in savings) would lose nearly $3,000 a year from their pension even at current deeming rates (The deeming rate danger spot) (The deeming rate danger spot) – likely more if rates climb.
In short, the people most at risk from this $3,300 change are those middle-of-the-pack retirees: not wealthy by any stretch, but with some savings or investments producing income.
Think folks who maybe sold a house and downsized, with leftover savings, or those with a bit of superannuation or term deposits. Many of these are self-funded retirees who later in life qualified for a part-pension as their savings dwindled.
Ironically, prudent savers could be the ones worse off, because the more financial assets you have, the more a higher deeming rate will 'deem' you to earn – and the less pension you get.
The deeming freeze was a temporary pandemic-era measure. Back in 2020, when COVID-19 hit, the Reserve Bank slashed interest rates to near-zero.
The government of the day responded by freezing, deeming rates at 0.25/2.25 per cent to ensure pensioners weren’t penalised as their bank interest earnings collapsed.
Fast forward to 2023-2024: interest rates skyrocketed (the RBA cash rate peaked at 4.1 per cent in 2023, a far cry from 0.25 per cent).
Normally, deeming rates would have risen in tandem – but the government kept the freeze in place for relief.
By mid-2024, this freeze had become very beneficial to pensioners: the upper deeming rate was well below real-world interest rates, meaning many could earn more on investments without it affecting their pension.
In fact, the freeze was calculated to save single pensioners about $3,300 a year (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green), and it helped about 870,000 Australians avoid a nasty cut in the 2024 budget (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green).
However, the freeze is set to end, and if nothing is done, deeming rates will likely be adjusted upwards.
From the government’s budgetary perspective, not extending the freeze makes financial sense: higher deeming rates would reduce pension outlays (essentially cost savings to the budget).
There’s also an argument about fairness: deeming is meant to reflect typical returns on investments.
With interest rates and yields higher now, some say it’s only fair for the deeming rate to catch up so that 'taxpayers aren’t over-subsidising pensioners' who might be earning decent interest.
But that view isn’t exactly popular to voice – and certainly not in an election year.
Politically, this issue is a bit of a hot potato. No one wants to tell pensioners before an election that their payments could be cut after the election.
Cue the sound of can-kicking. Prime Minister Anthony Albanese has been rather coy on the topic – he 'left the door open' to ending the freeze when asked, refusing to commit to an extension (Federal election 2025:).
The Opposition hasn’t offered a clear guarantee yet, either.
Advocacy groups suspect both major parties are sitting on the fence until votes are cast. Peak bodies for older Australians are demanding the parties fess up about their plans (Federal election 2025:).
Will the freeze be extended again (preventing a cut), or will it quietly be lifted (triggering the cut)? As of now, we have no official answer. It’s 'cone of silence' on deeming rates – which is making a lot of seniors nervous.
In the recent 2025 federal budget, delivered just ahead of the coming election, the government notably did not announce an extension of the deeming freeze beyond June.
This omission spoke volumes. COTA Australia (Council on the Ageing) and National Seniors Australia both voiced mixed feelings – they welcomed other cost-of-living measures but were disappointed not to see deeming addressed.
COTA’s chief, Patricia Sparrow, urged the government to 'publicly confirm' its intentions on deeming, explicitly calling for the freeze to continue beyond June 30, 2025 (Federal Budget helps ease the cost of living pressures for some older Australians; Missed opportunity to put dental in Medicare - COTA Australia).
She argued that keeping deeming rates at their current low levels 'would go some way to meeting the increased cost of living pressures' on those on the Age Pension (Federal Budget helps ease the cost of living pressures for some older Australians; Missed opportunity to put dental in Medicare - COTA Australia).
In other words, now is not the time to claw back pension dollars via a deeming tweak.
National Seniors Australia is on the same page. NSA CEO Chris Grice has made deeming rate policy a key election issue for his constituency.
'We are pushing for a continuation of the freeze on deeming rates to avoid further cost-of-living pain,' Grice said in NSA’s election platform ('Lend me your ears!' What seniors really want - National Seniors Australia).
The organisation warns that if the freeze lifts as scheduled, it 'will mean a drop in real income for pensioners from 1 July 2025 at a time that older people continue to struggle to make ends meet' ('Lend me your ears!' What seniors really want - National Seniors Australia).
Or put more bluntly, 'if deeming rates increase, pensioners will get less pension' – period ('Lend me your ears!' What seniors really want - National Seniors Australia).
And that’s exactly what has many seniors up in arms: why should they get less when everything else costs more?
The past couple of years have seen the fastest inflation since the 1990s, and households on fixed incomes (like the Age Pension) have been feeling the pinch.
'The aged pension is no longer sufficient to meet basic living expenses, with rising costs forcing many elderly Australians to make significant sacrifices,' says Carolyn McColl, who heads a Meals on Wheels branch and sees the struggles up close (The Cost of Living Longer Report 2024 | Australian Seniors).
'Since the onset of COVID-19, nearly every aspect of daily life — groceries, utilities, fuel, council rates — has seen substantial price increases,' she notes, leaving little room even for essentials like medical care (The Cost of Living Longer Report 2024 | Australian Seniors).
Consider some recent numbers: a national survey in 2024 found that 59 per cent of over-50s are struggling to pay for essential needs (The Cost of Living Longer Report 2024 | Australian Seniors).
Among full pensioners, only 1 in 10 feel confident they can cover their expenses on the pension alone (The Cost of Living Longer Report 2024 | Australian Seniors).
On average, the Age Pension now covers just 76 per cent of a retiree’s basic monthly expenses, and about 68 per cent of their income goes straight to essentials like housing, groceries and power bills (The Cost of Living Longer Report 2024 | Australian Seniors).
No wonder nearly 70 per cent of pensioners don’t believe the pension will be enough for their future (The Cost of Living Longer Report 2024 | Australian Seniors).
If you’re a senior reading this, these stats might just confirm what you already know from balancing your own budget.
The cost of food and staples has jumped (many shoppers have watched the price of a loaf of bread or a litre of milk creep up month by month).
Utility bills have been a shocker, too – electricity tariffs climbed steeply in 2023, prompting the government to roll out energy rebates. (In the latest budget, they offered a one-off $150 energy credit for older Aussies (Federal Budget helps ease the cost of living pressures for some older Australians; they missed the opportunity to put dental in Medicare - COTA Australia), which is nice – but for context, the average electricity bill rose by a few hundred dollars last year in many areas).
Petrol had its rollercoaster moments, and rent – well, heaven help any retiree who’s renting. Renters have been absolutely slugged by double-digit rent increases in some cities.
It’s therefore not surprising that in a recent COTA poll, older Australians ranked the cost of groceries as their number one concern (61 per cent put it in their top 3 issues), followed by the cost of energy bills (43 per cent) and healthcare/medicines (35 per cent) (Alleviating cost of living pressures key to older Australians’ vote: new polling - COTA Australia).
And for those seniors who don’t own their home, housing costs are a top anxiety – almost half of older renters (49 per cent) said housing affordability was among their biggest worries (Alleviating cost of living pressures key to older Australians’ vote: new polling - COTA Australia).
The government has tried to ease some of this pressure with targeted relief. Aside from the energy rebates and cheaper medicines (cutting some prescription costs) (Federal Budget helps ease cost of living pressures for some older Australians; Missed opportunity to put dental in Medicare - COTA Australia), they also raised the maximum Commonwealth Rent Assistance by 15 per cent in late 2023 – the largest increase to that payment in 30 years (Better support for renters | Treasury.gov.au).
That boost puts a bit more money (around $15 extra per week for single renters) into the pockets of pensioners who are paying rent. And, of course, the Age Pension itself is indexed twice a year to inflation.
In September 2022 and March 2023, those indexation jumps were some of the biggest ever (because inflation was high). Even in March 2025, the pension got a bump: an extra $4.60 a fortnight for singles and about $3.50 a fortnight for each member of a couple (Age Pension rates (March 2025 to September 2025)).
Every little bit helps – $4.60 might cover a loaf of bread or a litre of milk these days.
But when your supermarket bill is up by $20 or $30 compared to last year, and your quarterly power bill has a couple extra hundred tacked on, these increases can feel like a drop in the ocean.
Many seniors have responded by tightening belts. We hear of retirees skipping meals to save money or avoiding using heating and air-con to cut the electricity bill.
Community charities report more elderly clients seeking assistance for basics. It’s a tough reality: as prices surge, those on fixed incomes either find extra money (through savings, help from family, or even returning to work) or cut their consumption.
There’s not much fat to trim when you’re already living modestly. This is why the mere thought of a $3,300 pension hit has struck a nerve.
Both major advocacy groups, COTA and National Seniors, are loudly campaigning to keep the status quo (low deeming rates) until inflation truly abates.
They argue that once life is affordable again – if and when interest rates drop significantly – then we can talk about 'un-freezing' deeming.
Not now. As Ms Sparrow of COTA put it, continuing the freeze would help 'those on lower and fixed incomes like the age pension' cope with increased costs (Federal Budget helps ease cost of living pressures for some older Australians; Missed opportunity to put dental in Medicare - COTA Australia).
National Seniors is even pushing for a long-term fix: an independent mechanism to set deeming rates fairly, perhaps linking them to the RBA cash rate in a balanced way so that changes aren’t so sudden or politicised (Fair and consistent deeming rates - National Seniors Australia) (Fair and consistent deeming rates - National Seniors Australia).
They don’t want a repeat of this will-they-won’t-they saga every budget.
'A consistent and transparent method for determining deeming rates will ensure Australians know the pension is fair and not arbitrarily changed at the expense of pensioners’ living standards,' the NSA argues (Fair and consistent deeming rates - National Seniors Australia).
What do our political leaders say? Thus far, a lot of soothing words but few promises.
The Government emphasises how much it has already done for seniors, pointing to the energy rebates, cheaper healthcare, and the fact that it hasn’t touched deeming rates for three years (implicitly, 'we’ve been good to you so far').
Social Services Minister Amanda Rishworth noted that the freeze delivered a significant boost to pensioners and stressed that future changes will be carefully considered with the cost of living in mind.
The Opposition, for its part, sees an opening to court the grey vote – one could expect them to pledge something like extending the freeze or at least not cutting payments.
But as of writing, they’ve been careful not to make concrete promises either (perhaps waiting to see the government’s hand). With an election imminent, both sides are essentially telling seniors, 'We hear you – trust us.'
Of course, trust is earned, and older Australians are a savvy bunch.
They remember past pension battles and broken promises. Come election time, issues like deeming rates, energy prices, healthcare costs, and the pension’s buying power will be high on the agenda.
Older voters make up a large and influential voting bloc, and they will be watching closely for any hint of policies that affect their hip pocket.
As one 70-something reader quipped in a letter to the editor, 'Politicians ignore pensioners at their peril – we have long memories, and we vote in droves.'
So, what’s the bottom line? If the deeming rate freeze is extended (as advocates want), pensioners who rely on that extra ~$3,300 will breathe a sigh of relief, at least for another year.
If it’s not extended, those affected will face a tighter budget come next spring – effectively a cut to their pension. That would be a bitter pill, given the current cost-of-living climate.
In the meantime, seniors are being encouraged to stay informed and speak up.
National Seniors and COTA are urging older Australians to ask local candidates about this issue, share their personal stories, and ensure it doesn’t slip under the radar.
And on a practical note, financial counsellors suggest pensioners review their finances now: if you suspect a deeming change’ll hit you, maybe adjust your spending plan, look into any concessions or supplements you’re not using, or even consider whether you could benefit from advice on structuring your assets (for example, certain investment products or pre-paying some expenses might mitigate the impact).
To end on a hopeful note, Australia has a robust social security system, and public pressure can influence policy. Not many politicians relish headlines about 'pensioners worse off.'
In fact, mere weeks ago, the government was touting how its policies left single pensioners better off to the tune of $3,300 a year (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green).
It shows they know the importance of that support. With enough attention on this issue, there’s a fair chance our leaders will find a way to 'save' pensioners from the $3,300 hit, either by extending the freeze or tweaking the rates moderately rather than letting them spike.
As the saying goes, watch this space – and keep those voices raised.
'We’ve earned our retirement – don’t take away what little we have,' is the plea echoing from community halls and seniors’ centres across the country.
Let’s hope Canberra is listening. In the meantime, tighten that belt just in case, check what you’re entitled to, and remember: you’re not alone, and people are fighting in your corner to ensure this potential pension blow does not come to pass.
Sources:
'It would just pile on more pain,' one seniors’ advocate warns, for retirees already stretched thin by rising prices. What’s behind this $3,300 scare, who would be affected, and why is it happening now?
Here’s a deep dive into the issue – with a dash of Aussie candour and plenty of empathy for those who’ve earned their retirement but might be in for a rude shock.
What’s the $3,300 Centrelink Change All About?
At the centre of this furore is an arcane-sounding policy: 'deeming rates.' In simple terms, deeming rates are the interest rates the government assumes pensioners’ investments are earning, and they use that to calculate pension eligibility (Fair and consistent deeming rates - National Seniors Australia).Right now, those rates are frozen at historic lows – the first $62,600 of a single pensioner’s financial assets is deemed to earn 0.25 per cent, and anything above that at 2.25 per cent (The deeming rate danger spot).
This freeze has been in place since 2020 to shield seniors during the pandemic and beyond, and it was extended again in 2024.
Centrelink change feared cutting pensioners' payments by up to $3,300 a year. Credit: Facebook
In fact, the last federal budget confirmed the freeze would continue until 30 June 2025, a move that left a typical single-age pensioner $3,300 a year better off than they’d be if deeming had kept pace with surging interest rates (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green).
But here’s the catch: the freeze expires on 1 July 2025. If it’s not extended, deeming rates could jump back up to more 'normal' levels (remember, the Reserve Bank’s cash rate is around 4 per cent these days).
And when those deeming rates rise, pension payments fall.
How much trim are we talking about? Up to $3,300 less per year for some single pensioners, according to modelling by seniors’ groups (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green).
That’s about $126 less in the fortnightly pension – no small sum when you’re on a fixed income.
For context, the full single-age pension is about $1,149 per fortnight (≈$29,874 per year) (Age Pension rates (March 2025 to September 2025)), so $3,300 is more than 11 per cent of an entire year’s income for someone surviving on the pension alone.
Who Could Be Hit: 'Part-Pensioners' and Others in the Firing Line
If you’re an age pensioner with minimal assets (no significant savings, maybe just the family home and a bit in the bank), take a breath – this change likely won’t affect those on a full pension.It mainly targets 'part-pensioners' – retirees who have modest investments or nest eggs that are small enough to still get a pension, but large enough that the income test (with deeming) reduces their payment (Fair and consistent deeming rates - National Seniors Australia) (The deeming rate danger spot).
There are a lot of people in this boat. Roughly 660,000 aged pensioners currently have their pension determined by the income test (i.e. subject to deeming) rather than the asset test (Fair and consistent deeming rates - National Seniors Australia).
In total, about 450,000 older Australians on the Age Pension could see their payments drop if deeming rates rise (Labor and Coalition urged to fess up on deeming rate plans - AFR).
And it’s not just the Age Pension – Disability Support Pension and Carer Payment recipients (essentially anyone on a Centrelink pension payment with financial assets) use the same deeming rules.
As National Seniors Australia bluntly put it, 'hundreds and thousands of aged pensioners will lose money off their benefits' come July if nothing is done (Norma isn’t sure if she can afford to retire as market turmoil hits Australians’ super savings | Superannuation | The Guardian).
To be clear, no one is literally taking money out of a pensioner’s wallet. What happens is that as deemed income goes up, the pension paid by Centrelink goes down (because the system thinks you have more private income to live on).
Many part-pensioners could see their fortnightly Centrelink deposit shrink. It’s essentially a cut by stealth – using an administrative tweak to reduce entitlements. And many retirees might not even realise it’s coming.
'Many people assume their fortnightly Age Pension will stay the same... but this shift could make a real difference in how much you actually receive,' a retirement expert warns (The deeming rate danger spot).
Some seniors mistakenly believe as long as they’re under the asset limit, they’re safe – but the income test can bite well before you hit the asset cutoff.
And a single non-homeowner right at the asset limit (around $566k in savings) would lose nearly $3,000 a year from their pension even at current deeming rates (The deeming rate danger spot) (The deeming rate danger spot) – likely more if rates climb.
In short, the people most at risk from this $3,300 change are those middle-of-the-pack retirees: not wealthy by any stretch, but with some savings or investments producing income.
Think folks who maybe sold a house and downsized, with leftover savings, or those with a bit of superannuation or term deposits. Many of these are self-funded retirees who later in life qualified for a part-pension as their savings dwindled.
Ironically, prudent savers could be the ones worse off, because the more financial assets you have, the more a higher deeming rate will 'deem' you to earn – and the less pension you get.
Why Change It? (Or 'If It Ain’t Broke…?')
So, why on earth would the government consider raising these deeming rates now, effectively cutting pensions when seniors are already under cost-of-living strain? The official reason: because that was always the deal.The deeming freeze was a temporary pandemic-era measure. Back in 2020, when COVID-19 hit, the Reserve Bank slashed interest rates to near-zero.
The government of the day responded by freezing, deeming rates at 0.25/2.25 per cent to ensure pensioners weren’t penalised as their bank interest earnings collapsed.
Fast forward to 2023-2024: interest rates skyrocketed (the RBA cash rate peaked at 4.1 per cent in 2023, a far cry from 0.25 per cent).
Normally, deeming rates would have risen in tandem – but the government kept the freeze in place for relief.
By mid-2024, this freeze had become very beneficial to pensioners: the upper deeming rate was well below real-world interest rates, meaning many could earn more on investments without it affecting their pension.
In fact, the freeze was calculated to save single pensioners about $3,300 a year (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green), and it helped about 870,000 Australians avoid a nasty cut in the 2024 budget (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green).
However, the freeze is set to end, and if nothing is done, deeming rates will likely be adjusted upwards.
From the government’s budgetary perspective, not extending the freeze makes financial sense: higher deeming rates would reduce pension outlays (essentially cost savings to the budget).
There’s also an argument about fairness: deeming is meant to reflect typical returns on investments.
With interest rates and yields higher now, some say it’s only fair for the deeming rate to catch up so that 'taxpayers aren’t over-subsidising pensioners' who might be earning decent interest.
But that view isn’t exactly popular to voice – and certainly not in an election year.
Politically, this issue is a bit of a hot potato. No one wants to tell pensioners before an election that their payments could be cut after the election.
Cue the sound of can-kicking. Prime Minister Anthony Albanese has been rather coy on the topic – he 'left the door open' to ending the freeze when asked, refusing to commit to an extension (Federal election 2025:).
The Opposition hasn’t offered a clear guarantee yet, either.
Advocacy groups suspect both major parties are sitting on the fence until votes are cast. Peak bodies for older Australians are demanding the parties fess up about their plans (Federal election 2025:).
In the recent 2025 federal budget, delivered just ahead of the coming election, the government notably did not announce an extension of the deeming freeze beyond June.
This omission spoke volumes. COTA Australia (Council on the Ageing) and National Seniors Australia both voiced mixed feelings – they welcomed other cost-of-living measures but were disappointed not to see deeming addressed.
COTA’s chief, Patricia Sparrow, urged the government to 'publicly confirm' its intentions on deeming, explicitly calling for the freeze to continue beyond June 30, 2025 (Federal Budget helps ease the cost of living pressures for some older Australians; Missed opportunity to put dental in Medicare - COTA Australia).
She argued that keeping deeming rates at their current low levels 'would go some way to meeting the increased cost of living pressures' on those on the Age Pension (Federal Budget helps ease the cost of living pressures for some older Australians; Missed opportunity to put dental in Medicare - COTA Australia).
In other words, now is not the time to claw back pension dollars via a deeming tweak.
'We are pushing for a continuation of the freeze on deeming rates to avoid further cost-of-living pain,' Grice said in NSA’s election platform ('Lend me your ears!' What seniors really want - National Seniors Australia).
The organisation warns that if the freeze lifts as scheduled, it 'will mean a drop in real income for pensioners from 1 July 2025 at a time that older people continue to struggle to make ends meet' ('Lend me your ears!' What seniors really want - National Seniors Australia).
Or put more bluntly, 'if deeming rates increase, pensioners will get less pension' – period ('Lend me your ears!' What seniors really want - National Seniors Australia).
And that’s exactly what has many seniors up in arms: why should they get less when everything else costs more?
A Perfect Storm: Rising Prices Squeeze Seniors
This debate isn’t happening in a vacuum – it’s playing out against a backdrop of bruising cost-of-living pressures for older Australians.The past couple of years have seen the fastest inflation since the 1990s, and households on fixed incomes (like the Age Pension) have been feeling the pinch.
'The aged pension is no longer sufficient to meet basic living expenses, with rising costs forcing many elderly Australians to make significant sacrifices,' says Carolyn McColl, who heads a Meals on Wheels branch and sees the struggles up close (The Cost of Living Longer Report 2024 | Australian Seniors).
'Since the onset of COVID-19, nearly every aspect of daily life — groceries, utilities, fuel, council rates — has seen substantial price increases,' she notes, leaving little room even for essentials like medical care (The Cost of Living Longer Report 2024 | Australian Seniors).
Consider some recent numbers: a national survey in 2024 found that 59 per cent of over-50s are struggling to pay for essential needs (The Cost of Living Longer Report 2024 | Australian Seniors).
On average, the Age Pension now covers just 76 per cent of a retiree’s basic monthly expenses, and about 68 per cent of their income goes straight to essentials like housing, groceries and power bills (The Cost of Living Longer Report 2024 | Australian Seniors).
No wonder nearly 70 per cent of pensioners don’t believe the pension will be enough for their future (The Cost of Living Longer Report 2024 | Australian Seniors).
If you’re a senior reading this, these stats might just confirm what you already know from balancing your own budget.
The cost of food and staples has jumped (many shoppers have watched the price of a loaf of bread or a litre of milk creep up month by month).
Petrol had its rollercoaster moments, and rent – well, heaven help any retiree who’s renting. Renters have been absolutely slugged by double-digit rent increases in some cities.
It’s therefore not surprising that in a recent COTA poll, older Australians ranked the cost of groceries as their number one concern (61 per cent put it in their top 3 issues), followed by the cost of energy bills (43 per cent) and healthcare/medicines (35 per cent) (Alleviating cost of living pressures key to older Australians’ vote: new polling - COTA Australia).
And for those seniors who don’t own their home, housing costs are a top anxiety – almost half of older renters (49 per cent) said housing affordability was among their biggest worries (Alleviating cost of living pressures key to older Australians’ vote: new polling - COTA Australia).
The government has tried to ease some of this pressure with targeted relief. Aside from the energy rebates and cheaper medicines (cutting some prescription costs) (Federal Budget helps ease cost of living pressures for some older Australians; Missed opportunity to put dental in Medicare - COTA Australia), they also raised the maximum Commonwealth Rent Assistance by 15 per cent in late 2023 – the largest increase to that payment in 30 years (Better support for renters | Treasury.gov.au).
That boost puts a bit more money (around $15 extra per week for single renters) into the pockets of pensioners who are paying rent. And, of course, the Age Pension itself is indexed twice a year to inflation.
In September 2022 and March 2023, those indexation jumps were some of the biggest ever (because inflation was high). Even in March 2025, the pension got a bump: an extra $4.60 a fortnight for singles and about $3.50 a fortnight for each member of a couple (Age Pension rates (March 2025 to September 2025)).
Every little bit helps – $4.60 might cover a loaf of bread or a litre of milk these days.
But when your supermarket bill is up by $20 or $30 compared to last year, and your quarterly power bill has a couple extra hundred tacked on, these increases can feel like a drop in the ocean.
Many seniors have responded by tightening belts. We hear of retirees skipping meals to save money or avoiding using heating and air-con to cut the electricity bill.
There’s not much fat to trim when you’re already living modestly. This is why the mere thought of a $3,300 pension hit has struck a nerve.
Voices of Advocacy and Hope
The outcry from seniors’ advocates over the deeming rate issue is about more than just a formula in a Centrelink computer – it’s about protecting older Australians from falling into poverty.Both major advocacy groups, COTA and National Seniors, are loudly campaigning to keep the status quo (low deeming rates) until inflation truly abates.
They argue that once life is affordable again – if and when interest rates drop significantly – then we can talk about 'un-freezing' deeming.
Not now. As Ms Sparrow of COTA put it, continuing the freeze would help 'those on lower and fixed incomes like the age pension' cope with increased costs (Federal Budget helps ease cost of living pressures for some older Australians; Missed opportunity to put dental in Medicare - COTA Australia).
National Seniors is even pushing for a long-term fix: an independent mechanism to set deeming rates fairly, perhaps linking them to the RBA cash rate in a balanced way so that changes aren’t so sudden or politicised (Fair and consistent deeming rates - National Seniors Australia) (Fair and consistent deeming rates - National Seniors Australia).
They don’t want a repeat of this will-they-won’t-they saga every budget.
What do our political leaders say? Thus far, a lot of soothing words but few promises.
The Government emphasises how much it has already done for seniors, pointing to the energy rebates, cheaper healthcare, and the fact that it hasn’t touched deeming rates for three years (implicitly, 'we’ve been good to you so far').
Social Services Minister Amanda Rishworth noted that the freeze delivered a significant boost to pensioners and stressed that future changes will be carefully considered with the cost of living in mind.
The Opposition, for its part, sees an opening to court the grey vote – one could expect them to pledge something like extending the freeze or at least not cutting payments.
But as of writing, they’ve been careful not to make concrete promises either (perhaps waiting to see the government’s hand). With an election imminent, both sides are essentially telling seniors, 'We hear you – trust us.'
Of course, trust is earned, and older Australians are a savvy bunch.
Older voters make up a large and influential voting bloc, and they will be watching closely for any hint of policies that affect their hip pocket.
As one 70-something reader quipped in a letter to the editor, 'Politicians ignore pensioners at their peril – we have long memories, and we vote in droves.'
So, what’s the bottom line? If the deeming rate freeze is extended (as advocates want), pensioners who rely on that extra ~$3,300 will breathe a sigh of relief, at least for another year.
If it’s not extended, those affected will face a tighter budget come next spring – effectively a cut to their pension. That would be a bitter pill, given the current cost-of-living climate.
National Seniors and COTA are urging older Australians to ask local candidates about this issue, share their personal stories, and ensure it doesn’t slip under the radar.
And on a practical note, financial counsellors suggest pensioners review their finances now: if you suspect a deeming change’ll hit you, maybe adjust your spending plan, look into any concessions or supplements you’re not using, or even consider whether you could benefit from advice on structuring your assets (for example, certain investment products or pre-paying some expenses might mitigate the impact).
To end on a hopeful note, Australia has a robust social security system, and public pressure can influence policy. Not many politicians relish headlines about 'pensioners worse off.'
In fact, mere weeks ago, the government was touting how its policies left single pensioners better off to the tune of $3,300 a year (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green).
As the saying goes, watch this space – and keep those voices raised.
'We’ve earned our retirement – don’t take away what little we have,' is the plea echoing from community halls and seniors’ centres across the country.
Let’s hope Canberra is listening. In the meantime, tighten that belt just in case, check what you’re entitled to, and remember: you’re not alone, and people are fighting in your corner to ensure this potential pension blow does not come to pass.
Sources:
- National Seniors Australia, Election 2025 Advocacy – Deeming Rate Freeze ('Lend me your ears!' What seniors really want - National Seniors Australia) ('Lend me your ears!' What seniors really want - National Seniors Australia).
- COTA Australia, Media Release – Federal Budget 2025 (Federal Budget helps ease the cost of living pressures for some older Australians; Missed opportunity to put dental in Medicare - COTA Australia).
- Australian Financial Review, 'Deeming rate freeze keeps pensioners $3300 in the green' (Budget 2024: Deeming rate freeze extension keeps pensioners $3300 in the green).
- The Guardian, 'Calls grow to continue the freeze on deeming rates' (Norma isn’t sure if she can afford to retire as market turmoil hits Australians’ super savings | Superannuation | The Guardian).
- Australian Seniors Cost of Living Report 2024 (The Cost of Living Longer Report 2024 | Australian Seniors) (The Cost of Living Longer Report 2024 | Australian Seniors).
- Retirement Essentials, 'The deeming rate danger spot' (The deeming rate danger spot) (The deeming rate danger spot).
- Services Australia – Age Pension rates (March 2025) (Age Pension rates (March 2025 to September 2025)).
- COTA Polling on Older Voters’ Priorities (Alleviating cost of living pressures key to older Australians’ vote: new polling - COTA Australia) (Alleviating cost of living pressures key to older Australians’ vote: new polling - COTA Australia).
- Reserve Bank of Australia & ABS data on interest rates and inflation.
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