From 20 March 2026, the Australian Government Actuary (AGA) recommended new deeming rates of 1.25% (lower) and 3.25% (upper), which Services Australia now uses to calculate the income Centrelink counts from your financial assets for Age Pension purposes. The Department of Social Services (DSS) confirmed the change. If your financial assets are modest, the impact on your pension will likely be small. If you hold significant cash savings or recently sold your home, it is worth running the numbers now.
Who is most likely affected:
- Singles or couples with large cash savings or term deposits above the deeming thresholds
- Pensioners who recently sold their principal home and are holding proceeds temporarily
- Retirees whose total financial assets sit close to the income-free area threshold
Who is unlikely to be affected:
- Retirees whose Age Pension is already limited by the assets test rather than the income test
- Those with minimal financial assets (the principal home is excluded from deeming)
Pro Tip: Check your current deeming figure directly on Services Australia's deeming page before assuming the change affects you — many retirees find the income test is not their binding constraint.
Table of Contents
- What is deeming and how does Centrelink use it?
- What exactly changed in 2026 and why?
- How do the 2026 changes affect your Age Pension?
- A worked example: how deeming changes your pension
- Concrete steps to take right now
- When should you review, and who can help?
- Key takeaways
- A measured reset, not a shock
- How Amberwealth can help with deeming-rate impacts
- Official sources to verify current rates
What is deeming and how does Centrelink use it?
Deeming treats your financial assets as earning a set rate of return, regardless of what they actually earn. Centrelink adds that deemed income to any other income you receive, then applies the income test to work out your Age Pension entitlement. Your real returns — higher or lower — are irrelevant to this calculation.
The two-rate structure works like this: the first portion of your financial assets (up to a threshold) is assessed at the lower rate; everything above that threshold attracts the upper rate. As of 20 March 2026, those thresholds are $64,200 for singles and $106,200 for pensioner couples combined, per Services Australia.
Deeming sits inside the income test, which is one of two means tests Centrelink runs. The other is the assets test, which looks at the total value of what you own. Your pension is determined by whichever test produces the lower payment. So if the assets test already cuts your pension significantly, a change in deeming rates may not move the needle at all.
Financial assets subject to deeming include:
- Bank accounts, term deposits, and cash management accounts
- Shares, managed funds, and listed investment companies
- Account-based pensions and allocated pensions
- Loans you have made to others
Your principal home is excluded. The DSS historical tables show how these rules have evolved since 1996 if you want the longer view.
Common misconceptions:
- Centrelink does not count actual returns above the deeming rates as extra income
- Deeming applies to the asset value, not the income you actually receive
- Non-pensioner couples face different thresholds to pensioner couples
What exactly changed in 2026 and why?
The AGA recommended increases effective 20 March 2026, raising the lower rate from 0.75% to 1.25% and the upper rate from 2.75% to 3.25%. The Minister for Social Services accepted the recommendation.
This is not a sudden shift. Deeming rates were frozen for several years and that freeze ended on 30 June 2025. An interim step on 20 September 2025 added 0.5% to each rate. The March 2026 change is the second increment in that gradual reset. The AGA's explanatory statement confirms each increase was capped at 0.5% per review to avoid a single large jump.
The rationale is straightforward. The lower rate is designed to reflect returns available from safe, accessible products like bank accounts. The upper rate reflects products with somewhat reduced accessibility or higher risk, such as term deposits and shares. As market rates rose after the freeze, the AGA reset deeming to better reflect what pensioners can reasonably earn.
"The AGA recommended increases to deeming rates to reflect the returns reasonably available to most payment recipients, following the gradual reset process after the extended freeze ended 30 June 2025." — AGA Deeming Rate Recommendation, March 2026
The DSS confirms the AGA will now provide six-monthly recommendations, so further adjustments are possible. Think of this as a recalibration process, not a one-off event.
Pro Tip: Always check the 'last updated' date on Services Australia and DSS pages. Rates can change mid-year, and an outdated figure in your calculation will give you the wrong answer.
How do the 2026 changes affect your Age Pension?
Higher deeming rates increase your deemed income, which can reduce your Age Pension under the income test. The practical effect depends on how much of your financial assets sit above the lower-rate threshold.
For a single retiree, the first $64,200 of financial assets is deemed at 1.25% — that produces $802.50 in annual deemed income. Assets above $64,200 attract 3.25%. For a pensioner couple, the first $106,200 is at 1.25% ($1,327.50 annually), with the excess at 3.25%.
The income test reduces the pension by 50 cents for every dollar of income above the income-free area. So an increase in deemed income of, say, $500 per year translates to a pension reduction of roughly $250 per year, or about $9.60 per fortnight. For most retirees with modest financial assets, the change is real but not dramatic.
Where the impact is most material:
- Large cash holdings well above the threshold (the upper rate applies to the excess)
- Proceeds from a recent home sale sitting in a bank account
- Account-based pensions with significant balances
Where the impact is negligible:
- Financial assets below or close to the lower-rate threshold
- Retirees already limited by the assets test
- Those whose principal home dominates their wealth
One point worth noting: if your actual investment returns exceed the deeming rates, Services Australia disregards the extra amount entirely. A well-managed portfolio earning above 3.25% on its upper-tier assets is not penalised for that outperformance.
A worked example: how deeming changes your pension
Result first: in this example, the March 2026 rate change reduces the Age Pension by approximately $9.60 per fortnight for a single retiree.
| Item | Amount |
|---|---|
| Assets below threshold ($64,200) | $64,200 |
| Lower rate: $64,200 × 1.25% | $802.50 per year |
| Income test reduction (50c per $1 over free area) | ~$250 per year |
| Fortnightly pension reduction | ~$9.60 per fortnight |
This example is illustrative only. Actual pension impacts depend on your full financial picture, other income sources, and which test (income or assets) applies to you.
Steps to replicate this with your own numbers:
- List all financial assets subject to deeming (bank accounts, shares, managed funds, account-based pensions).
- Identify your threshold: $64,200 (single) or $106,200 (pensioner couple combined).
- Split your assets into the below-threshold and above-threshold portions.
- Multiply the below-threshold amount by 1.25% and the above-threshold amount by 3.25%.
- Add both figures to get total annual deemed income.
- Compare total income (deemed plus other) to the income-free area to estimate any pension reduction.
Pro Tip: Use the Amberwealth Superannuation Calculator to test different asset scenarios, or contact Amberwealth for a personalised calculation that accounts for your full financial position.
Concrete steps to take right now
The most useful thing you can do today is confirm your current deeming figure and check whether the income test or assets test is limiting your pension.
- Run the calculation — Use the steps above or the Services Australia online estimator to calculate your deemed income under the new rates.
Pro Tip: If you sold your principal home on or after 1 January 2023 and the proceeds are intended for a new home, those funds attract the lower deeming rate (1.25%) while held for that purpose. Timing your sale and purchase carefully can matter — confirm the rules with Services Australia.
When should you review, and who can help?
Review your deeming position immediately if any of these apply:
- You have sold or are about to sell your principal home
- You have moved significant funds between accounts or asset types
- Your total financial assets have crossed the lower-rate threshold ($64,200 single / $106,200 couple)
- The AGA issues a new recommendation (expect six-monthly reviews from here)
Official contacts and tools:
- Services Australia deeming page — current rates, thresholds, and online estimator
- DSS deeming rates page — historical tables and governance context
- AGA deeming recommendations — official rate recommendations and rationale
- Centrelink phone: 132 300 (Age Pension enquiries)
Always check the 'last updated' date on any official page before relying on the figures shown.
Documents to have ready for a review:
- Bank and term deposit statements (current balances)
- Share and managed fund statements
- Account-based pension balance and drawdown details
- Details of any home sale proceeds and intended use
Amberwealth's Age Pension strategies service is specifically designed for situations like this — a structured review that maps your assets against the current deeming rules and identifies whether any restructuring makes sense.
Key takeaways
The 2026 deeming reset raises the lower rate to 1.25% and the upper rate to 3.25%, increasing deemed income for retirees with financial assets above the threshold — but the pension impact is modest for most.
| Point | Details |
|---|---|
| New rates from 20 March 2026 | Lower rate is 1.25%; upper rate is 3.25%, per the AGA recommendation. |
| Thresholds to know | $64,200 (single) and $106,200 (pensioner couple) separate the two rates. |
| Actual returns above deeming | Services Australia disregards returns above the deeming rates — no penalty for outperformance. |
| Home sale proceeds rule | Proceeds from a principal home sold from 1 January 2023 attract the lower rate if used for a new home. |
| Amberwealth can help | Book an Age Pension strategy review if the worked example shows a material change to your pension. |
A measured reset, not a shock
The instinct many retirees have when they hear "deeming rates are rising" is to worry that Centrelink is about to take a bigger slice of their pension. The reality is more nuanced. This is a structured recalibration after years of artificially low rates, not a punitive policy shift.
What I find more interesting is the structural advantage deeming creates for retirees with well-managed portfolios. If your investments are genuinely earning above 3.25%, Services Australia simply ignores the excess. That is a meaningful incentive to hold growth assets rather than parking everything in cash, where actual returns and deemed returns are roughly the same. The retirees who tend to be most affected by deeming changes are those sitting on large cash balances, not those with diversified portfolios.
The six-monthly review cycle the AGA has now adopted also changes the planning context. Deeming rates are no longer a fixed background assumption you can set and forget for years. Checking your position once a year, particularly after any significant asset movement, is now just good practice.
For most retirees, the March 2026 change will be a minor line item. For those with substantial financial assets above the threshold, or proceeds from a recent home sale, a proper review with a financial adviser is worth the time.
How Amberwealth can help with deeming-rate impacts
Amberwealth specialises in exactly this kind of Centrelink strategy work for Australians aged 45 and over. The deeming-rate reset is a practical trigger to review whether your asset structure, account types, and pension arrangements are still working as efficiently as they could be.
Relevant services include retirement planning, Age Pension strategy, superannuation and SMSF advice, and investment management — all available face-to-face or online across Victoria, New South Wales, South Australia, and Tasmania.
If the worked example in this article suggests your pension could be affected, the clearest next step is a strategy review. Book a consultation with Amberwealth to get a calculation based on your actual numbers, not a generic illustration.
Official sources to verify current rates
Confirm current rates on Services Australia before acting on any figure in this article.
- Services Australia — deeming page: current rates (1.25% / 3.25%), thresholds, online estimator, and rules for home sale proceeds
- AGA deeming recommendation — March 2026: the official recommendation and effective date
- DSS social security deeming rates: governance context and historical rate tables
Always check the 'last updated' date on each page. Rates can change mid-year, and official pages are updated on the effective date of any change.
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