Are You Getting More Under the 2025 Age Pension Changes?

Australia’s Age Pension is a lifeline for millions of retirees, providing essential financial support to cover living expenses in retirement. With the cost of living continuing to rise, the Australian government has announced significant changes to the Age Pension system effective July 1, 2025. These updates include increased payment rates, adjustments to eligibility criteria, and potential changes to deeming rates, all designed to help retirees maintain their financial stability. But will these changes mean more money in your pocket? This article explores the 2025 Age Pension changes in detail, examining who benefits, who might miss out, and how retirees can assess their entitlements. By understanding these updates, you can better plan for your financial future.

Overview of the 2025 Age Pension Changes

The Age Pension is adjusted periodically to reflect economic conditions, primarily through indexation based on the Consumer Price Index (CPI) and the Pensioner and Beneficiary Living Cost Index (PBLCI). The July 2025 changes are a special mid-year adjustment, supplementing the regular March and September indexations, to address rising costs in essentials like groceries, utilities, and healthcare. Key changes include increased pension rates, updated income and assets test thresholds, and potential revisions to deeming rates, which could significantly impact pensioners’ payments.

New Pension Rates: Will You Get More?

Starting July 1, 2025, Age Pension payment rates will increase to keep pace with inflation and living costs. While final figures are subject to government confirmation, projections based on recent trends suggest the following maximum fortnightly rates, including the base pension, Pension Supplement, and Energy Supplement:

Single Pensioner: Approximately $1,170 per fortnight (up from $1,149 in March 2025), or about $30,420 annually.
Couple (each): Approximately $880 per fortnight (up from $866.10), or about $22,880 per person annually.
Couple (combined): Approximately $1,760 per fortnight (up from $1,732.20), totaling around $45,760 annually.
Couples Separated Due to Illness: Each receiving the single rate of $1,170 per fortnight, totaling approximately $60,840 combined annually.

These increases, estimated at $21 per fortnight for singles and $28 combined for couples, will automatically apply to existing pensioners. For retirees relying heavily on the Age Pension, this boost could help cover:

Essential Expenses: Higher grocery and utility bills.
Healthcare Costs: Increased access to medical services or medications.
Small Luxuries: Occasional dining out or leisure activities to improve quality of life.

However, the actual benefit depends on whether you receive a full or part pension, as income and assets tests play a significant role in determining your entitlement.

Who Benefits Most from the Rate Increases?

The 2025 rate increases are most beneficial for:

Full Pensioners: Those with limited income and assets below the lower thresholds will receive the maximum increase without reductions.
Low-Income Retirees: Pensioners with minimal additional income (e.g., from superannuation or investments) will see the full $21 or $28 per fortnight increase.
Non-Homeowners: Retirees who rent or live in retirement villages may benefit more, as their higher living costs align with the PBLCI-driven adjustments.

To estimate your exact payment, tools like the Age Pension Entitlements Calculator from Retirement Essentials can provide personalized projections based on your financial situation.

Deeming Rates: A Potential Setback

A critical factor in determining whether you’ll get more under the 2025 changes is the potential end of the deeming rate freeze. Deeming rates are used by Centrelink to calculate income from financial assets (e.g., savings, shares, term deposits) for the income test, regardless of actual returns. Since the COVID-19 pandemic, these rates have been frozen to provide stability, but the freeze is set to expire on June 30, 2025, unless extended.

Current and Projected Deeming Rates

As of June 2025, the deeming rates are:

Lower Rate: 0.25% for financial assets up to $60,400 (singles) or $100,200 (couples).
Upper Rate: 2.25% for assets above these thresholds.

If the freeze ends, National Seniors Australia (NSA) predicts potential increases to 3.8% (lower rate) and 5.6% (upper rate). This change could significantly reduce pension payments for those with substantial financial assets. For example:

A single pensioner with $500,000 in financial assets currently has $10,050 deemed income annually. Under the new rates, this could rise to $26,800, reducing their fortnightly pension by up to $203 (approximately $5,278 annually).
A couple with $800,000 in assets could see deemed income increase from $16,050 to $44,200, reducing their combined pension by up to $285 per fortnight ($7,410 annually).

Who Could Lose Out?

Pensioners most at risk of reduced payments include:

Part Pensioners: Those with financial assets above the lower thresholds, as higher deemed income could push them closer to the income test cut-off.
Self-Funded Retirees Transitioning to Pension: Retirees applying for the Age Pension with significant savings or investments may find their eligibility limited.
High-Net-Worth Retirees: Those with large superannuation balances or investment portfolios face the greatest risk of payment reductions.

NSA estimates that around 500,000 pensioners, including both full and part pensioners, could see payment cuts if deeming rates rise. Advocacy groups are pushing for an extension of the freeze or a phased increase to soften the impact.

Mitigating the Impact

To minimize the effect of deeming rate changes, consider:

Reallocating Assets: Shift investments to assets with lower deemed income, such as annuities, after consulting a financial adviser.
Leveraging the Work Bonus: Earn up to $300 per fortnight from employment without affecting your pension, with unused amounts accruing in a Work Bank up to $11,800.
Monitoring Updates: Check Centrelink or NSA announcements for final deeming rate decisions and use online estimators to assess your situation.

Income and Assets Tests: Expanded Eligibility

The 2025 changes include adjustments to the income and assets test thresholds, which determine eligibility for full and part pensions. From July 1, 2025, the lower thresholds for full pension eligibility are expected to rise, potentially allowing more retirees to qualify. Based on last year’s adjustments, estimates include:

Income Test: An increase of approximately $14 per fortnight for singles and $24 for couples.
Assets Test (Non-Homeowners): An increase of around $21,750 for singles and $32,500 for couples.

These changes could benefit:

Retirees Near the Threshold: Those just above the current limits may now qualify for a full pension.
New Applicants: Retirees applying for the first time may find it easier to meet eligibility criteria.

Upper thresholds, which affect part-pension eligibility, are typically adjusted in March and September, with the next update on September 20, 2025. Use Centrelink’s MyGov portal to check your eligibility and ensure accurate reporting of income and assets.

Superannuation and Other Changes

The 2025 pension changes coincide with updates to Australia’s superannuation system, which can indirectly affect pensioners:

Super Guarantee (SG): The SG rate will rise to 12% from 11.5% on July 1, 2025, boosting retirement savings for working retirees.
Proposed Super Tax: A potential 15% tax on earnings from super balances over $3 million (if legislated) could impact high-net-worth retirees, prompting adjustments to super withdrawal strategies.
Minimum Drawdown Rates: These remain halved (e.g., 2% for ages 65–74), allowing retirees to preserve super balances longer.

Retirees should review their superannuation strategies to optimize pension entitlements, especially if affected by deeming rate changes.

International Context

Globally, 2025 brings pension updates in several countries:

United Kingdom: The State Pension will increase by 4.1% from April 2025, with weekly payments rising to £230.25 ($11,973 annually) for the full new State Pension.
New Zealand: NZ Superannuation rates will adjust for inflation from April 1, 2025, ensuring retirees’ purchasing power.
Canada: Nova Scotia’s Public Service Superannuation Plan will expand to private-sector employers from February 2025.

These changes reflect a global effort to support retirees, but Australia’s mid-year pension increase is a proactive response to immediate cost-of-living pressures.

How to Assess Your Entitlement

To determine if you’ll get more under the 2025 changes:

Check Payment Rates: Use the updated rates to estimate your fortnightly pension.
Review Assets and Income: Assess your financial assets and income against the new thresholds using Centrelink’s online tools or Retirement Essentials’ calculator.
Monitor Deeming Rates: Stay informed about the freeze decision and model potential impacts with NSA’s estimator.
Consult Advisers: Work with financial planners to optimize your pension and superannuation strategies.
Engage in Advocacy: Join campaigns like NSA’s to advocate for fair pension policies.

Looking Forward

The 2025 Age Pension changes offer a financial boost for many Australian retirees, with increased payment rates providing relief against rising living costs. However, the potential end of the deeming rate freeze could reduce payments for those with significant financial assets, making it essential to plan ahead. By understanding the new rates, eligibility thresholds, and deeming rate implications, you can determine whether you’ll get more in 2025. Tools like Centrelink’s MyGov portal and Retirement Essentials’ calculators can help you navigate these changes, while advocacy and financial planning ensure you maximize your entitlements. As July 2025 approaches, take proactive steps to secure your financial future in retirement.