The landscape of Australian social security is shifting as the Federal Government officially confirms a rise in deeming rates effective from March 20, 2026. For millions of retirees and income support recipients, this announcement marks a significant departure from the multi-year freeze that protected many during the pandemic era. Deeming is a central pillar of the Centrelink income test, used to estimate the earnings from your financial assets regardless of what they actually return in the bank. As these “assumed” earnings climb, the math behind your fortnightly payment changes. While the government has paired this increase with a boost in pension indexation, many part-pensioners are now asking whether the extra money in one hand will be taken away by the other.
Understanding the New 2026 Deeming Thresholds
For several years, the lower deeming rate sat at a record low of 0.25%, with the upper rate at 2.25%. Following a gradual reset that began in late 2025, the Minister for Social Services has accepted the Australian Government Actuary’s advice to lift these rates further. Starting March 20, 2026, the lower rate will jump to 1.25%, while the upper rate will climb to 3.25%. This shift is designed to reflect the higher interest rates currently available in the broader economy. However, for those with modest savings or superannuation balances in the pension phase, the “new normal” means the government now expects your money to work harder, which can result in a higher income assessment and a subsequently lower pension payment.
The Impact on Your Fortnightly Payments
The primary concern for most is the bottom line. If you are a single pensioner with substantial financial assets, your “deemed” income will rise even if you haven’t changed your investments. For example, a single person with $150,000 in financial assets will see more of those assets assessed at the higher 3.25% rate. While the first $64,200 remains at the lower tier, the jump in the upper rate can lead to a reduction in the Age Pension by several dollars a fortnight. The government has attempted to cushion this blow by timing the change with the March indexation, which is expected to increase the full single Age Pension by approximately $22.20 per fortnight. For many, this indexation will offset the deeming increase, but those near the income test cut-offs may find their net gain is much smaller than expected.
2026 Deeming Rate Comparison Table
To visualize how these changes look on paper, the following table compares the rates before and after the March 2026 update:
| Asset Tier | Rate Until March 19, 2026 | New Rate From March 20, 2026 | Impact Direction |
| First Threshold (Singles <$64,200) | 0.75% | 1.25% | Up 0.50% |
| First Threshold (Couples <$106,200) | 0.75% | 1.25% | Up 0.50% |
| Balance Above Threshold (Upper Rate) | 2.75% | 3.25% | Up 0.50% |
| Total Deemed Income | Varies by asset level | Increases | Higher Income Test |
Why Part-Pensioners Face the Greatest Risk
While full-rate pensioners with very few assets may see little to no change, part-pensioners are in the “splash zone.” Because their payments are already being tapered based on their income or assets, any increase in deemed income directly reduces their entitlement. A person receiving a part-pension might find that the 0.50% increase in deeming rates eats up a significant portion of their cost-of-living indexation. Furthermore, individuals holding the Commonwealth Seniors Health Card (CSHC) should also be wary. Since the CSHC is subject to an income test that includes deemed income from account-based pensions, those close to the limit could potentially lose their eligibility if their deemed income pushes them over the threshold.
Strategic Adjustments for Your Portfolio
In light of these changes, it is a wise move to review where your funds are sitting. The Australian Government Actuary bases these rates on the assumption that retirees can access competitive interest rates, often found in online savings accounts or term deposits. If your money is sitting in a “lazy” transaction account earning 0.1%, you are effectively being penalized, as Centrelink will still assess you at the 1.25% or 3.25% rate. Moving funds into higher-yielding products can help ensure your actual earnings match or exceed what the government assumes you are making. This doesn’t change your pension amount, but it does ensure your total cash flow (pension plus investment earnings) remains as healthy as possible.
Planning for the Future Under New Advice
The role of the Australian Government Actuary (AGA) in setting these rates is a new development aimed at providing transparency. Moving forward, the AGA will review market conditions twice a year, providing recommendations every February and August. This means the era of multi-year “freezes” is likely over, and retirees should prepare for more frequent, smaller adjustments in line with the RBA’s cash rate and market trends. Staying informed is no longer optional; it is a necessity for financial survival. By understanding that these rates are a “floor” for your expectations, you can better manage your budget and avoid being blindsided by a smaller-than-expected deposit from Services Australia come late March.
FAQs
Q1. Will my pension definitely go down on March 20?
Not necessarily. While the deeming rate increase might reduce your payment, the regular March indexation (inflation adjustment) usually increases the base pension. For most, the indexation will be larger than the deeming impact, resulting in a small net increase.
Q2. Which assets are subject to these new deeming rates?
Deeming applies to most financial assets, including bank accounts, shares, managed funds, gold bullion, and certain gifts. It also applies to superannuation if you have reached Age Pension age.
Q3. Can I appeal the deeming rate if my bank pays less interest?
No. Deeming is a set rule applied to everyone regardless of their actual investment choice. This is why it is recommended to shop around for better interest rates to ensure your real income keeps up with the government’s assumptions.
