$3,300 Centrelink boost for 450,000 pensioners

Pensioners will be thousands of dollars better off after the government announced it would continue to freeze the deeming rate for another year. It’s among the cost-of-living measures announced in tonight’s federal budget, alongside energy rebates for all households and cheaper medicines.

The deeming rate is the rate of return the government assumes retirees earn on their investments, regardless of their actual return. It determines how much of a pension retirees can access - along with whether they can get a pension to begin with.

The rate has been frozen for the last two years, with the top rate at 2.25 per cent. Now, the government has extended the freeze until June 30, 2025.

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Treasurer Jim Chalmers said the freeze would benefit more than 870,000 people, including 450,000 people receiving the age pension.

With interest rates now rising to a 12-year high of 4.35 per cent, there was some pressure on the government to lift deeming rates. Chalmers had previously noted that the deeming rate “should broadly reflect movements in the cash rate”.

The announcement will come as welcome news to the country’s nearly half a million pensioners, who will now not see a drop in their welfare payments due to deeming rates.

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According to the Australian Financial Review, single pensioners will be about $3,300 better under the move.

Social Services Minister Amanda Rishworth said the “relatively simple step” would “provide continued relief” for the thousands of people with deemed income receiving income support.

What is the deeming rate?

The deeming rate for a single person is currently 0.25 per cent for the first $60,400 of a single person's financial assets. Anything over this is deemed to earn 2.25 per cent.

For a couple where at least one person gets the pension, the threshold is higher at $100,200.

What else is in the budget for pensioners?

Cheaper medicines were also on the agenda, with the government freezing the maximum cost of medicines listed on the Pharmaceutical Benefits Scheme (PBS) at $31.60 for one year.

Pensioners and concession holders will get the cost of their medicines frozen for the next five years, meaning they won’t pay more than $7.70 for medicine.

Pensioners who receive Commonwealth Rent Assistance will also see their payment increase by up to 10 per cent. This is on top of the 15 per cent increase delivered in the last budget.

More broadly, the government is giving a $300 energy bill rebate for every Australian household and $325 relief to eligible small businesses from July 1.

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