Page 7 - FWP Wealth-Adviser-Issue-121 (FWP)

ISSUE 121
SEPTEMBER 2025

NAVIGATING DEEMING RATES

STRATEGIES FOR BUILDING WEALTH

AND SECURITY IN RETIREMENT depositphotos.com

BY WEALTH ADVISER funds, superannuation (in certain circumstances), some
account-based pensions, and bonds. The family home is
Introduction: What Are Deeming Rates—and excluded.
Why Should You Care? From 20 September 2025, there will be two main rates:
Retirement security is a top priority for every Australian • The lower rate will rise to 0.75% (up from 0.25%),
planning their later years. One of the most important but applied to the first $64,200 of assets for singles and
often overlooked rules influencing how much Age Pension $106,200 for couples.
you receive is the Government’s “deeming rate.” With • The higher rate will move to 2.75% (up from 2.25%),
changes to those rates coming in September 2025, taking the applied to asset value above those thresholds.
time to understand what they mean can make a real differ- This means, for example, if a single retiree has $100,000
ence to your financial wellbeing. in savings and investments, the first $64,200 is “deemed” to
Deeming rates are how the Government estimates the in- earn 0.75%, and the remaining $35,800 at 2.75%. The total
come earned from your savings and investments for the pur- “deemed income” is added to other income streams (such as
pose of the Age Pension income test. Rather than checking part-time work), and if it exceeds the income test free area,
the exact return on every account or asset, a standard rate the pension is reduced.
is “deemed” across almost all financial assets. This process The policy aims for fairness by treating all retirees sim-
streamlines assessments, yet has practical consequences— ilarly, regardless of where or how their money is invested.
especially as the rules change. The upcoming increase marks If your assets earn more than the deeming rate, you’ll keep
the end of a multi-year freeze and will impact retirees across the excess—if they earn less, the Government still uses the
Australia, making now the perfect time to get informed. deemed figure.

How Deeming Rates Work: Simple Rules, Big Why Are Deeming Rates Changing in 2025?
Implications For the past several years, deeming rates have been fro-
Deeming rates apply to a range of financial assets such zen, even as interest rates and the broader economy shifted
as savings accounts, term deposits, listed shares, managed dramatically due to the pandemic. This freeze protected Age

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