By Tony Densley

That part made the news, and it is genuinely good news. Rates lift twice a year to keep pace with the cost of living, and this is one of those days.

Here’s the part that got almost no coverage. On exactly the same day, deeming rates go up as well.

After more than 30 years in the financial services sector, I can tell you that deeming is the most misunderstood part of the Age Pension. Most people have never had it explained properly. So let me start there, because this is what decides whether the rise benefits your pocket or sneakily gets trimmed back so that by the time it reaches you, it's almost non-existent.

CENTRELINK DOESN’T COUNT WHAT YOUR SAVINGS ACTUALLY EARN

It assumes a rate, and that assumed rate is called deeming. It applies whether or not your money earned anything like it.

It also covers more than most people expect:

• Bank and savings accounts

• Term deposits

• Shares and managed funds

• Account-based pensions

• Money held in most other financial investments

There are two deeming rates: a lower one that applies to the first tier of your financial assets, and a higher one that applies to everything above that. Both go up on 20 September.

SO, TWO THINGS MOVE ON THE SAME DAY

Your payment rate rises and Centrelink assumes your earnings also rise.

How much of the increase you actually get depends on how much money you have outside your home.

If you don’t have much in savings, the deeming change probably won’t make much difference, you’ll see most of the increase.

If your savings are modest, the deeming change barely touches you and you will feel the full increase. If you’ve built a decent balance, part of that increase gets absorbed.

Same rule change, same day, two very different outcomes. That’s why it’s not unusual if one friend tells you the rise was lovely and another will tell you they barely noticed.

THE BIGGER POINT, AND THE ONE I MOST WANT YOU TO TAKE AWAY

Your pension is worked out under two tests, an income test and an assets test, and you receive whichever result pays less. The arrangement of your money matters, not just the amount of it.

I’ve sat with retirees who assumed they earned too much to qualify and were simply wrong. I’ve also sat with people who’d been receiving a part pension for years without ever knowing that changing how their money was arranged would have improved it. Nobody had ever mapped it with them.

Indexation day is a natural prompt to check. Not because the change itself is dramatic, but because it makes the real question obvious: where do I actually sit now? It’s an opportunity to pause and assess, and optimise.

No headline can actually tell you about your finances; you have to look at your numbers alongside the headlines.

FREQUENTLY ASKED QUESTIONS

Here is the part I most want families to hear.

The care system changed. The money system around it did not.

The way aged care connects to your pension, your family home, your spouse's position and your estate is still just as tangled as it ever was. One decision still moves the others. The choices still come quickly, often in a crisis, often for the first time.

So while the reforms are welcome, they do not remove the need to plan. If anything, a system in transition is exactly when calm, informed guidance matters most.

After more than 30 years, and as an accredited aged care professional, I can tell you the families who cope best are still the ones who understood the money side before the crisis, not during it.

FREQUENTLY ASKED QUESTIONS

Do I need to do anything on 20 September?
No. Both changes are applied automatically to existing payments. You do not need to contact anyone or complete a form. What is worth doing is understanding what the combination means for your unique position, which is a very different question.

Why might my pension rise by less than my neighbour's?
Almost always because of deeming. The more you hold in financial assets, the more of your assessed income comes from the deemed rate, so a rise in that rate offsets more of your increase. A neighbour with modest savings feels the full rise.

Is deeming based on what my bank actually pays me?
No, and this surprises many people. Centrelink applies an assumed rate regardless of your real return. If you are earning more than the deemed rate, you are ahead. If you are earning less, you are being assessed on income you never received.

I have never applied because I assumed I earn too much. Should I check?
Yes. This is the most common thing I see. The two tests interact with how your money is held, and the thresholds move twice a year. A great many people who assumed they did not qualify actually did.

Indexation day is a good prompt to give your finances a health check. If you would like to understand what 20 September means for you, rather than for the average, your first discovery meeting is obligation-free. Book your free discovery call:. Book your free discovery call.

https://welcome.faceupliving.com/booking-call

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