Amanda Hardy Lai

Amanda has worked in the financial services industry since 1998 and has been providing financial advice since 2006. Her career has been driven by a commitment to ensuring the highest standards of financial advice and client care. To book a consultation with Amanda click here.
The deeming rates freeze: What happens if it ends in July?

The deeming rates freeze: What happens if it ends in July?

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Why the unfreezing of deeming rates in 2025 matters.

Using deeming rates is the way Centrelink calculates the income you earn from your financial asset, regardless of whether you receive that income or not.

In May 2020, the then Morrison Government froze deeming rates to protect retirees during the economic uncertainty of COVID-19. This temporary measure was extended twice, most recently to July 2025, to help pensioners manage rising living costs.

The most recent freeze is now scheduled to end – but will it? With a federal election approaching and cost-of-living concerns still high, some wonder if the Albanese Government might extend it again.

If the freeze does end, how much might deeming rates rise? And how can (or – is it possible for ?) retirees (to) prepare?

What are deeming rates?

Centrelink uses deeming rates to estimate income from financial assets (excluding homes, home contents, cars, etc.) rather than using actual investment returns or the income you received. 

The current rates are:

Singles: 0.25% on assets up to $60,400, 2.25% on amounts above

Couples: 0.25% on assets up to $100,000, 2.25% on amounts above.

Deeming rates were much higher in the past, but were reduced as interest rates fell. They have remained unchanged since 2020.

Will an inheritance affect your Age Pension?

Will an inheritance affect your Age Pension?

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How will an inheritance affect your Age Pension entitlements? Many Retirement Essentials  ask this question. As life expectancy increases, it’s not unusual for people to receive an inheritance much later in life—often when they are already retired and receiving an Age Pension.

If you do receive a lump sum inheritance (or any lump sum), there are some important things you need to know to avoid unexpected pension reductions or even overpayments that need to be repaid.

You must tell Centrelink

It’s essential to notify Centrelink within 14 days of receiving any lump sum. Failing to do so can result in overpayments that must be repaid, which can be difficult if the funds have already been spent. 

Susan and Terry’s inheritance dilemma

Susan, 70, and Terry, 75, received a $400,000 inheritance. They own their own home with a $180,000 mortgage and have $470,000 in combined super. They also like to keep a cash buffer of $15,000 for emergencies, and value their personal assets at $25,000. 

Currently they are receiving $41,735 in Age Pension as a couple, and they draw down their additional spending needs from their Account-Based Pensions.

Their top three questions were:

Would gifting inheritance money to their children affect  their pension?

Should they pay off their mortgage?

What’s the best way to use the money without losing Age Pension benefits?

Is 67 the right time to retire?

Is 67 the right time to retire?

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Stop now – or keep working?

Retirement at 67 is often seen as the default, but is it really the best choice for everyone? Helen, who turns 67 in April, is weighing up her options. She has $275,000 in superannuation, $25,000 in personal assets, and $10,000 in cash. She earns $68,000 working part-time and receives a UK pension of $9,800 per year. She enjoys her work and isn’t in a hurry to stop, but she also wants to make sure she’s financially secure.

So, should Helen retire now or keep working part-time for a few more years? Let’s explore her options. Helen’s dilemma is a great example of the diverse experiences and attitudes of many Retirement Essentials members.  Some can’t wait to finish working so they can have new experiences and adventures. Others are genuinely loving their work and want to transition to a retirement lifestyle while keeping their options open.