Proposed Federal Budget includes updates for pensioners. See how this can affect the senior community
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As Aussies navigate through the complexities of managing finances, everyone's keeping an eye on government decisions that could help put extra cash in everyone's pockets.
With the Federal Budget proposal lodged, a recent decision got many Aussie seniors talking, as this could affect them significantly.
The government recently confirmed that deeming rates will remain frozen for another year.
This freeze was a part of the 2025 Federal Budget.
Around 460,000 pensioners may see the effect of this freeze, with an estimated $450 million staying in pensioners' pockets to help combat the rising cost of living.
Deeming rates are a critical factor in the calculation of Centrelink payments for pensioners.
These rates are assumed rates of return that the government applies to a person's financial assets—including shares, superannuation, and bank accounts.
If any of these assets earn more than its supposed deemed rate, the additional income may not be counted by the government when determining pension payments.
This rule could make a significant difference in how much pension seniors receive.
As of writing, the lower deeming rate is set at 0.25 per cent. Meanwhile, the upper rate is set at 2.25 per cent.
These rates have been in place since May 2020 and have traditionally followed the Reserve Bank of Australia's cash rate, which is currently at 4.10 per cent.
However, the government recently decided to keep these rates despite the cash rate increases.
Freezing deeming rates was first implemented by the former Coalition government in 2022.
For two years, these rates were frozen as a cost-of-living measure.
The Labor government then extended this freeze last year, and it should last until 1 July 2025.
This freeze could impact the Federal Budget—a one percentage point increase in deeming rates could save about $1.8 billion over four years.
For single pensioners, the first $62,600 of their financial assets are subject to the lower deeming rate of 0.25 per cent.
Any amount over this threshold is deemed to earn 2.25 per cent.
For couples where at least one person is receiving a pension, the first $103,800 of combined financial assets are deemed at the lower rate, with the remainder at the higher rate.
These thresholds are indexed every 1 July to reflect increases in the cost of living.
See how several key figures are reacting to the Federal Budget here:
Source: 9 News Australia/YouTube
In addition to the freeze on deeming rates, the Labor government also made several promises that could further ease pensioners' financial burden.
These promises included a pledge to reduce the price of PBS-listed medicines to no more than $25 and a substantial energy bill relief, among others.
As Aussies continue to see the implications of the 2025 Federal Budget, it's crucial to stay informed about how these changes may affect you and your living situation.
What do you think of this update? Will the freeze on deeming rates make a difference, or is it not enough to keep up with today's living conditions? What changes did you want to see in the Federal Budget? Share your thoughts and opinions with us in the comments section below.
With the Federal Budget proposal lodged, a recent decision got many Aussie seniors talking, as this could affect them significantly.
The government recently confirmed that deeming rates will remain frozen for another year.
This freeze was a part of the 2025 Federal Budget.
Around 460,000 pensioners may see the effect of this freeze, with an estimated $450 million staying in pensioners' pockets to help combat the rising cost of living.
Many Australians are keeping an eye on this year's Federal Budget as the elections loom closer. Image Credit: Budget Australia
Deeming rates are a critical factor in the calculation of Centrelink payments for pensioners.
These rates are assumed rates of return that the government applies to a person's financial assets—including shares, superannuation, and bank accounts.
If any of these assets earn more than its supposed deemed rate, the additional income may not be counted by the government when determining pension payments.
This rule could make a significant difference in how much pension seniors receive.
As of writing, the lower deeming rate is set at 0.25 per cent. Meanwhile, the upper rate is set at 2.25 per cent.
These rates have been in place since May 2020 and have traditionally followed the Reserve Bank of Australia's cash rate, which is currently at 4.10 per cent.
However, the government recently decided to keep these rates despite the cash rate increases.
Freezing deeming rates was first implemented by the former Coalition government in 2022.
For two years, these rates were frozen as a cost-of-living measure.
The Labor government then extended this freeze last year, and it should last until 1 July 2025.
This freeze could impact the Federal Budget—a one percentage point increase in deeming rates could save about $1.8 billion over four years.
For single pensioners, the first $62,600 of their financial assets are subject to the lower deeming rate of 0.25 per cent.
Any amount over this threshold is deemed to earn 2.25 per cent.
For couples where at least one person is receiving a pension, the first $103,800 of combined financial assets are deemed at the lower rate, with the remainder at the higher rate.
These thresholds are indexed every 1 July to reflect increases in the cost of living.
See how several key figures are reacting to the Federal Budget here:
Source: 9 News Australia/YouTube
In addition to the freeze on deeming rates, the Labor government also made several promises that could further ease pensioners' financial burden.
These promises included a pledge to reduce the price of PBS-listed medicines to no more than $25 and a substantial energy bill relief, among others.
As Aussies continue to see the implications of the 2025 Federal Budget, it's crucial to stay informed about how these changes may affect you and your living situation.
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