Deeming Rates Just Changed: Is Your Pension Now Lower Than Expected?

On 20 March 2026, the deeming rates were adjusted as part of the regular rate review cycle. The new rates are:

• Lower deeming rate: 1.25% (up from 1.00%)
• Upper deeming rate: 3.25% (up from 3.00%)

The thresholds where the upper rate kicks in remain at:

• Singles: First $62,600 deemed at 1.25%, everything above at 3.25%
• Couples (combined): First $103,800 deemed at 1.25%, everything above at 3.25%

This is the first increase to deeming rates since they were frozen during COVID. It means Centrelink now assumes you're earning more from your financial investments — even if your actual returns haven't changed. For some pensioners, this translates directly to a lower pension payment.

Deeming is the method Centrelink uses to estimate how much income your financial assets are generating. It doesn't matter what you actually earn from those assets — Centrelink applies a fixed formula.

Example: Margaret, single pensioner with $200,000 in financial assets

• First $62,600 deemed at 1.25% = $782.50/year ($30.10/fortnight)
• Remaining $137,400 deemed at 3.25% = $4,465.50/year ($171.75/fortnight)
• Total deemed income: $5,248.00/year ($201.85/fortnight)

Under the old rates (1.00% / 3.00%), Margaret's deemed income would have been $4,748.00/year ($182.62/fortnight). So the rate change means Centrelink considers her to be earning an extra $500 per year — and her pension will be reduced accordingly.

At the 50-cent-per-dollar taper rate, Margaret's pension drops by approximately $250 per year ($9.62/fortnight). Not catastrophic, but when you're on a fixed income, every dollar counts.

The deeming rate change affects anyone whose Centrelink payment is assessed under the income test and who holds financial assets. This includes:

• Age Pension recipients with savings, shares, managed funds, or account-based super
• Disability Support Pension recipients with financial assets
• Carer Payment recipients
• JobSeeker recipients over Age Pension age
• Veterans' Affairs pension recipients
• Commonwealth Seniors Health Card holders (deeming affects income test assessment)

If your financial assets are below the lower threshold ($62,600 for singles, $103,800 for couples), the impact is minimal — a 0.25% increase on a small balance. The biggest impact is felt by people with significant assets above the threshold, particularly retirees with large account-based super balances.

If you're on the full rate pension and your deemed income is still below the income free area ($204/fortnight single, $360/fortnight couple combined), you won't notice any change at all.

You need to know two things: your total financial assets and whether you're single or partnered.

Financial assets include:

• Bank accounts (savings, term deposits, everyday accounts)
• Shares and managed funds
• Account-based superannuation pensions
• Bonds and debentures
• Loans you've made to others
• Gold, silver, and cryptocurrency

Financial assets do not include your home, your car, household contents, or non-account-based super (accumulation phase super if you're under Age Pension age).

Use our Deeming Rates Calculator to get your exact deemed income and see how it affects your pension — it takes about 30 seconds and uses the current March 2026 rates.

There are some legitimate ways to reduce how much deemed income Centrelink counts against you:

• Gifting (within limits): You can gift up to $10,000 per financial year (and $30,000 over 5 years) without it being counted as a deprived asset. Gifting reduces your financial assets and therefore your deemed income. But go over the limit and Centrelink will deem the excess for 5 years anyway.
• Prepay expenses: Paying for funeral bonds (up to $15,000), prepaying insurance premiums, or paying off debts reduces your assessable financial assets.
• Home improvements: Spending money on your principal home removes it from assessable assets entirely — your home is exempt.
• Funeral bonds: Up to $15,000 invested in a funeral bond is exempt from both the income and assets tests.
• Purchase a lifetime annuity: Some lifetime annuity products receive concessional treatment under the income test, meaning less of the income is counted. Get financial advice before going down this path.

One thing to be careful about: restructuring assets purely to increase your pension can backfire if Centrelink considers it deprivation. If you're thinking about major changes, talk to a Centrelink Financial Information Service (FIS) officer — it's a free service available to all Australians. Call 132 300 to book.

Deeming rates are not indexed automatically like payment rates. They're set by the Minister for Social Services and can be changed at any time — but in practice, changes are rare and usually announced with several weeks' notice.

Before the COVID freeze, deeming rates were last changed in 2020 when they were reduced to 0.25% / 2.25% as an emergency measure. They were gradually increased back to 1.00% / 3.00%, and the March 2026 adjustment to 1.25% / 3.25% reflects the higher interest rate environment.

With the Reserve Bank of Australia holding the cash rate at 3.60% as of early 2026, and term deposit rates ranging from 4.0% to 4.8%, the government's position is that the current deeming rates are below actual market returns for most savers. Whether you agree with that depends on where your money is parked.

The next change could come in the May 2026 Budget or at any point the Minister decides to act. We'll update our Deeming Rates Calculator immediately when any changes are announced.