For many Australian retirees, pension payments are a financial lifeline — carefully calculated and relied upon every fortnight. But in 2026, a less visible change is raising concerns among experts and pensioners alike.
Deeming rates — the figures used to estimate income from savings and investments — are rising again. While it may sound technical, the impact is very real: millions of Australians could see their pension payments reduced without any actual increase in their real income.
For 68-year-old Perth retiree Susan Mitchell, the change feels unfair. “My savings haven’t grown,” she says. “But suddenly it looks like I’m earning more on paper — and that affects my pension.”
Here’s what’s happening, why it matters, and how it could affect your payments in 2026.
What’s Changing in 2026?
The government has begun adjusting deeming rates upward after a period of historically low settings.
Key Changes:
- Deeming rates increased in 2026
- Applies to financial assets like savings, shares, and super income streams
- Used to calculate income for Age Pension eligibility
- Higher deemed income may reduce pension payments
- No actual increase in real earnings required
This means your pension could drop even if your financial situation hasn’t improved.
What Are Deeming Rates?
Deeming rates are used by Centrelink to estimate how much income you earn from your financial assets.
How It Works:
- A set percentage is applied to your total financial assets
- This “deemed income” is used in the income test
- The result determines your pension payment level
Example:
- If you have $100,000 in savings
- A higher deeming rate means a higher assumed income
- This can reduce your pension eligibility
Why Are Deeming Rates Rising?
The increase reflects broader economic conditions.
Key reasons include:
- Rising interest rates
- Higher returns in some investment markets
- Government alignment with economic benchmarks
- Efforts to balance pension spending
A government official explained:
“Deeming rates are adjusted to reflect prevailing financial conditions and ensure fairness across the system.”
Real Stories Behind the Change
In Sydney, retiree David Nguyen says the change came as a shock. “I didn’t earn any extra income,” he explains. “But my pension dropped slightly.”
Meanwhile, Brisbane pensioner Helen Carter says she’s worried about future increases. “If rates keep rising, I could lose more support,” she says.
These stories highlight how technical policy changes can have real-world consequences.
Government Statements
Officials say the adjustments are part of maintaining a sustainable pension system.
A spokesperson stated:
“The deeming system simplifies income assessment and ensures consistency across different types of investments.”
Another added:
“Support remains targeted to those who need it most.”
Expert Analysis and Financial Insights
Financial experts warn that rising deeming rates can create “hidden cuts.”
- Pension reductions may occur without real income increases
- Retirees relying on low-yield savings are most affected
- The system may not reflect actual returns in all cases
Financial planner Mark Reynolds explains:
“When deeming rates rise faster than actual returns, retirees effectively lose income in real terms.”
Who Is Most Affected?
The changes mainly impact:
- Pensioners with savings or investments
- Self-funded retirees receiving partial pensions
- Individuals with term deposits or low-yield accounts
- Couples with combined financial assets
Those with minimal assets may see little or no impact.
Comparison: Before vs After 2026
| Aspect | Before 2026 | After 2026 |
|---|---|---|
| Deeming Rates | Lower | Higher |
| Assumed Income | Lower | Increased |
| Pension Payments | Higher | Potentially reduced |
| Financial Pressure | Moderate | Increased |
How Much Could You Lose?
The exact impact varies, but estimates suggest:
- Small reductions of $10–$50 per fortnight for some
- Larger impacts for those near income thresholds
- Gradual changes as rates continue to adjust
Even small reductions can add up over time.
What You Should Do Now
To protect your pension:
- Review your financial assets and income test position
- Check your Centrelink assessment regularly
- Seek financial advice if needed
- Consider restructuring assets where appropriate
- Stay updated on deeming rate changes
Being proactive can help minimise losses.
Common Misconceptions
- “My pension won’t change unless I earn more” — Not true
- “Deeming rates don’t affect me” — They affect most pensioners with assets
- “This is a one-time change” — Rates can be adjusted again
- “Only wealthy retirees are impacted” — Many average retirees are affected
Will Deeming Rates Rise Further?
Future increases are possible, depending on:
- Interest rate movements
- Economic conditions
- Government policy decisions
Ongoing adjustments mean pensioners should stay alert.
Q&A: Deeming Rates 2026
1. What are deeming rates?
Rates used to estimate income from assets.
2. Why are they increasing?
To reflect economic conditions.
3. Will my pension decrease?
Possibly.
4. Do I need to earn more to lose benefits?
No.
5. Who is affected most?
Those with financial assets.
6. How much could I lose?
Varies by individual.
7. Is this permanent?
Rates can change over time.
8. Can I appeal my assessment?
Yes.
9. Should I review my finances?
Yes.
10. Does this affect full pensioners?
Less likely.
11. Are couples affected differently?
Yes.
12. Is financial advice recommended?
Often, yes.
13. Will there be more changes?
Possible.
14. Can I reduce the impact?
Potentially.
15. What should I do now?
Check your Centrelink details.
A Quiet Change With Real Impact
The rise in deeming rates in 2026 may not grab headlines in the same way as direct payment cuts, but its effects are just as significant for many retirees.
For pensioners like Susan Mitchell, the issue is simple. “It feels like you’re losing money without actually doing anything different,” she says.
As the year progresses, understanding how deeming works — and how it affects your payments — will be essential in protecting your financial stability.
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