Higher deeming incomes, Age Pension asset test limits and payments from 20 September

Deeming rates changed for the first time in five years in September, which will affect the income the government estimates retirees earn from their investments. At the same time, Age Pension payments and part Age Pension cut off limits have also increased.

Deeming rates used to estimate the income Age Pension recipients receive from their financial investments increased from 20 September for the first time since being frozen during the
COVID-19 pandemic.

The increase means retirees will be deemed to receive more income than previously from the same amount of financial investments.

Pension payments are reduced by 50 cents for every dollar of additional income. But while that will see Age Pension payments reduced for some, it may be offset for many by an increase in Age Pension entitlements.

There has also been an increase in the part Age Pension cut off limit and in the income limit for the Commonwealth Seniors Health Card – but once again, that change may be offset by the increase to the deeming rates.

Many people mistakenly assume they’re not eligible, so it’s worth checking if you qualify under the new rules. Eligibility for the government Age Pension starts at age 67, though you can apply up to 13 weeks earlier.

What are the new deeming rates and why do they matter?

The deeming rate increased from 0.25% to 0.75% for the first $64,200 a single pensioner receives and the first $106,200 a couple receives.

The higher deeming rate, which applies to the balance of any financial assets, increased by the same amount, from 2.25% to 2.75%.

Age Pension payments increased in September 2025

Here are the maximum Age Pension payment rates that are in effect as of 20 September, paid fortnightly, along with their respective annual equivalents. Single payments rose by $29.70 per fortnight, while combined payments for couples increased by $22.40 per person.

Maximum Age Pension payments from 20 September 2025

Department of Social Services Indexation Rates September 2025. *Includes basic rate plus maximum pension and energy supplements.

Payments last increased in March 2025 and are likely to change again when they are next assessed in March 2026.

Tip: Many people assume they’re not eligible for either a part or full Age Pension and therefore apply late or miss out on this and other government benefits.

Age Pension income and assets test thresholds increase

The government reviews the Age Pension income and assets test thresholds in July each year. The upper limits, also known as thresholds, increase in March and September each year in line with Age Pension payment increases.

Whether you are eligible for the Age Pension depends on your age, residency and your income and assets.

If your income and assets are below certain thresholds you may be eligible.

When determining how much you’re entitled to receive under the income and assets tests, the test that results in the lower amount of Age Pension applies.

Here are the income and assets test thresholds that apply as at 20 September, compared with previous thresholds.

Assets test thresholds

The lower assets test threshold determines the point where the full Age Pension starts to reduce, while the upper assets test thresholds determine what the cut off points are for the part Age Pension.

If the value of your assets falls between the lower and upper assets test thresholds, your entitlement will be reduced. The higher your assessable assets, the lower the amount of Age Pension you are eligible to receive.

Your family home is exempt from the assets test but your investments, household contents and motor vehicles may be included.

Asset test thresholds from 20 September 2025

Source: Services Australia Age Pension Assets test thresholds

Income test thresholds from 20 September 2025

The lower income test threshold determines the point where the full Age Pension starts to reduce, while the upper income test threshold determines what the cut off point is for the part Age Pension.

Income includes things like payment for employment or self employment activities, rental income and a deemed rate of income from financial investments such as managed funds, super (if you are over the Age Pension age) or account-based pensions commenced after 1 January 2015.

Income doesn’t include things like emergency relief payments.

Income test thresholds from 20 September 2025

Source: Services Australia Age Pension Income test thresholds

If you have income between the lower and upper income test thresholds, your entitlement will reduce as your level of income rises.

For example, the Age Pension payment for a single person earning more than $218 per fortnight will reduce by 50 cents for each dollar earned over $218.

For a couple earning more than $380 per fortnight combined, the Age Pension payment for each person will reduce by 25 cents for each dollar earned over $380.

Tip: The Work Bonus allows you to work and earn up to $300 per fortnight without affecting your Age Pension. If you don’t work, this amount accrues up to a maximum Work Bonus balance of $11,800.

Commonwealth Seniors Health Card income limit increases

From 20 September 2025, the income limit to qualify for the Commonwealth Seniors Health Card (CHSC) will be:

• Single: $101,105 per annum (an increase of $2,080).

• Couple (combined): $161,768 per annum (an increase of $3,328).

You must be Age Pension age and meet some other requirements to be eligible for the CSHC.

If you’d like personal guidance on this topic, contact our team to discuss your situation.

Source: Colonial First State