Deeming rates are the rates of return the government assumes your financial assets are earning, regardless of the actual interest or investment returns you receive. Instead of looking at your bank statement or super fund’s performance, Centrelink uses these rates to “deem” the income from your assets.

For example, even if your savings account is earning just 1% interest, the deeming rules might assume you’re earning more. This is to create a fair and consistent way of assessing income across all pensioners, so that people with similar assets are treated equally.

How Do Deeming Rates Apply to Super?

If you’ve reached Age Pension age and you’re drawing an income stream from your super (like an account-based pension), Centrelink applies deeming rates to the balance of that account. It doesn’t matter how much income you’re actually withdrawing—the deemed income is what counts when working out how much Age Pension you’ll receive.

This means that even if your super fund performs poorly in a given year, the deemed income used in pension calculations stays based on the set government rates.

Why It Matters

Deeming rates can directly affect:

• Your Age Pension entitlement – Higher deemed income may reduce your pension payments.
• Your financial planning – Understanding deeming helps you estimate how much income Centrelink will “see” you as earning, which might differ from your actual returns.
• Your retirement strategy – By knowing how deeming works, you and your adviser can make better decisions about where to hold assets, how much to draw from super, and how to structure your retirement income. 

A Practical Example

Let’s say you have $250,000 in an account-based pension. Instead of looking at the fund’s performance, Centrelink applies the deeming rates to calculate your income. If the deeming rate is set at, for example, 2.25%, your deemed income would be $5,625 per year—regardless of whether your fund actually earned that amount.

The Takeaway

Deeming rates aren’t about how much you really earn—they’re about providing a consistent method for assessing income from super and investments. Because these rules can impact your Age Pension, it’s essential to understand them and factor them into your retirement planning.

If you’re unsure how deeming affects your super and pension entitlements, your accountant or financial adviser can help you understand the numbers and plan with confidence.