Key Changes to the Age Pension from September 2025
The Australian Age Pension will undergo four significant changes starting from September 20, 2025. These changes include an increase in deeming rates, an increase in the maximum age pension rate, a rise in the cut-off limits for part age pensions, and an increase in the taxable income limit for the Commonwealth Seniors Health Card.
The most notable change is the increase in the deeming rates, which are used for the income means test. The deeming rates (there are two: a low rate and a standard rate) determine the notional income of financial assets owned by age pensioners and applicants. The low deeming rate applies to the first $64,200 for single pensioners and the first $106,300 for pensioner couples, with the standard rate applying to the balance of the financial assets. From September 20, 2025, the low deeming rate will be 0.75% and the standard rate will be 2.75%, compared to the previous rates of 0.25% and 2.25% respectively. Deeming rates are used for administrative ease as a proxy for actual earning rates, rather than counting the actual income earned by financial assets. The increase is considered an adjustment, as the rates had been "frozen" for the previous five years as part of the COVID-19 measures.
Increasing the deeming rates will increase the amount of income counted for the income means test, which will, all things being equal, reduce the age pension entitlement. A simple illustration of this is that for each $1,000 of financial assets, the fortnightly age pension entitlement will decrease by $2.50. This is because the income deemed to be produced from $1,000 of financial assets increases from $22.50 to $27.50 per fortnight, and at the 50% reduction rate, this decreases the pension by $2.50 per fortnight.
The single rate of the age pension will increase by $29.70 per fortnight, and the couple combined rate will increase by $44.80 per fortnight from September 20, 2025. As a result, the maximum fortnightly age pension will be $1,178.70 for single pensioners (previously $1,149.00) and $1,777.00 for combined couple pensioners (previously $1,732.20). These new rates will apply automatically.
The part pension cut-off limit will also increase from September 20, 2025. The new limits will be $2,575.40 a fortnight for a single age pensioner and $3,934.00 for a couple (combined). The cut-off limit automatically increases by twice the increase in the maximum age pension amount because the withdrawal rate is 50%. Individuals who were previously excluded from the age pension by a small amount should consider reapplying.
Finally, for individuals who are otherwise eligible but disqualified by the means tests, the taxable income limit for the Commonwealth Seniors Health Card will increase by $2,080 for singles and $3,328 for couples. The new income limits will be $101,105 per annum for individuals and $161,768 per annum for couples (combined). While the Seniors Health Card provides fewer benefits than the Pensioner Card, it is still valuable.
Source: Age Pension – 4 major changes applying from 20 September 2025 | SUPERCentral
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