For many Australian retirees, every fortnightly pension payment helps cover essential expenses like groceries, electricity, and medical bills. When small changes occur in how the government calculates pension income, the impact can be felt immediately in household budgets.
From 20 March 2026, changes to the deeming rates used in Age Pension calculations could affect how much some retirees receive from Centrelink. While many pensioners may not notice a difference, others with financial assets such as savings accounts, shares, or managed funds could see payments fall by up to $40 per fortnight.
Understanding how deeming works is essential for retirees who rely on the Age Pension as a primary source of income.
What’s Changing From 20 March 2026
Deeming rates are the government’s way of estimating income from financial assets when calculating eligibility for income-tested benefits such as the Age Pension.
Instead of assessing the actual income earned from savings or investments, the government assumes those assets generate income at a set rate.
Beginning 20 March 2026, these assumed rates will be reviewed and may increase slightly to reflect higher interest rate conditions.
Key aspects of the change include:
- The lower deeming rate could increase, affecting smaller savings balances.
- The upper deeming rate may also rise, impacting pensioners with larger financial assets.
- Pension income calculations will be automatically updated by Services Australia.
- Some pensioners could experience reductions of up to $40 per fortnight depending on their financial assets.
- Pensioners with minimal savings may not see any noticeable change.
The adjustment reflects broader economic conditions where returns on savings accounts and investments have risen compared with previous years.
Understanding the Deeming System
The deeming system was created to simplify pension calculations and create consistent rules for assessing income from financial assets.
Rather than checking actual interest earned every month, the government applies a standard assumed return to certain assets.
Financial assets typically included in deeming assessments are:
- Bank savings accounts
- Term deposits
- Shares and dividends
- Managed investment funds
- Cash investments and bonds
These assets are combined and assessed using the lower and upper deeming thresholds.
For example:
- Assets below a certain threshold are assessed using the lower deeming rate.
- Assets above that threshold are assessed using the higher deeming rate.
The calculated “deemed income” is then used in the Age Pension income test.
If the assessed income increases, the pension payment may decrease.
Why Some Pensioners Could Lose $40 a Fortnight
The Age Pension income test reduces pension payments once assessed income exceeds certain limits.
If deeming rates increase:
- The government assumes retirees earn more income from their assets.
- Higher assessed income may push pensioners closer to income thresholds.
- This can result in a smaller pension payment.
For some retirees with moderate savings or investments, the difference could amount to about $20–$40 per fortnight.
The exact reduction depends on several factors:
- Total financial assets
- Whether the pensioner is single or part of a couple
- Existing income levels
- Other government benefits received
Comparison Table: Potential Impact of Deeming Changes
| Pensioner Scenario | Financial Assets | Current Assessment | After Rate Change | Possible Payment Impact |
|---|---|---|---|---|
| Single pensioner with small savings | $60,000 | Lower deemed income | Slight increase | Minimal change |
| Single pensioner with moderate assets | $180,000 | Moderate deemed income | Higher assessment | Small reduction |
| Couple with higher savings | $300,000 | Higher deemed income | Increased assessed income | Up to $40 less per fortnight |
| Pensioner with limited assets | Under $40,000 | Very low deemed income | Small change | No noticeable impact |
These examples illustrate how the changes could affect different financial situations.
Why the Government Reviews Deeming Rates
Deeming rates are periodically reviewed to ensure they reflect general investment conditions and interest rate environments.
During periods of low interest rates, governments may keep deeming rates low to prevent pensioners from being unfairly assessed as earning more than they actually do.
However, when savings returns increase across the economy, adjustments may occur so the deeming system remains aligned with financial markets.
Regular reviews help maintain fairness between pension recipients with different types of investments.
What You Should Know
If you receive the Age Pension or other income-tested benefits in Australia, the March 2026 deeming update may affect how your payments are calculated.
Important points to remember:
- The change takes effect 20 March 2026.
- Services Australia will automatically update pension calculations.
- Pensioners do not need to apply for the adjustment.
- Only financial assets covered by deeming rules are affected.
- Payment updates will appear in Centrelink statements or online accounts.
Checking your financial asset details in your Centrelink account can help ensure assessments remain accurate.
Q&A: Deeming Rate Changes 2026
1. What are deeming rates?
Deeming rates are assumed rates of return used by the government to estimate income from financial assets when calculating Age Pension eligibility.
2. When will the new deeming rates apply?
The updated rates are expected to take effect on 20 March 2026.
3. Why are deeming rates changing?
They are periodically reviewed to reflect broader economic conditions such as changes in interest rates.
4. How much could pension payments decrease?
Some pensioners may see reductions of up to $40 per fortnight depending on their assets.
5. Will every Age Pension recipient be affected?
No. Many pensioners with smaller financial assets may not experience any change.
6. Which assets are included in deeming calculations?
Savings accounts, term deposits, shares, managed funds, and certain investment products.
7. Do pensioners need to report anything for the change?
No. Services Australia automatically applies the new rates using existing financial information.
8. Will other benefits be affected?
Yes, deeming rates may also influence other income-tested payments linked to financial assets.
9. Can pensioners appeal the calculation?
Yes. If the financial information used is incorrect, a review can be requested.
10. Will the change affect the assets test?
No. Deeming only affects the income test, not the assets test.
11. Could pension payments increase because of the change?
Generally, higher deeming rates do not increase payments because they raise assessed income.
12. How will pensioners know if their payment changes?
Services Australia will notify recipients through Centrelink messages or letters.
13. How often are deeming rates reviewed?
They are reviewed periodically depending on economic conditions.
14. Should pensioners change their investments because of this?
Investment decisions should be based on personal financial advice and long-term plans.
15. Where can retirees check their pension details?
Through their Centrelink online account or MyGov portal.
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