Centrelink has raised its deeming rates for the third time in about a year, and for some Age Pension recipients the change quietly eats into the pension increase that arrived on the same day. Here is what deeming is, what the new rates are, and how to work out whether your own payment is affected. For the official rules, see Services Australia.
What changed on 20 September 2026
From 20 September 2026, the deeming rates Centrelink uses to assess your income from financial assets are:
- 1.75% on the first $66,800 of financial investments for a single person ($110,600 for a couple combined), and
- 3.75% on everything above those thresholds.
Both rates rose by half a percentage point. It is the third rise in about twelve months, following increases in September 2025 and March 2026. Before that, the rates had been frozen at 0.25% and 2.25% since 2020.
The same day also brought the regular twice-yearly pension indexation. The maximum Age Pension went up by $36.80 a fortnight for singles, to $1,237.70 a fortnight, and by $55.60 a fortnight for couples combined, to $1,866.00. For many pensioners the rise flows straight into their payments. For some, the higher deeming rate claws part of it back before it ever arrives.
What “deeming” actually means
Centrelink does not look at what your savings, shares or term deposits actually earn. Instead, it assumes they earn a set rate of return and counts that assumed amount as income, whether you receive it or not.
Financial assets that are deemed include bank accounts, term deposits, shares, managed funds, loans you have made, and account-based pensions. Your own home is exempt from the assets test, and rental properties are not deemed — the rent you actually receive is counted as income instead.
A simple example: a single person with $100,000 in financial assets is deemed to earn $1,169 on the first $66,800 (at 1.75%) and $1,245 on the remaining $33,200 (at 3.75%). That is $2,414 a year, or about $92.85 a fortnight, counted as income — whatever the money really earned.
If your real returns are higher than the deemed rate, you keep the difference, which rewards you for finding a better return. If your real returns are lower, you are assessed as though you earned more than you did. That is the side of the deal causing concern this time around.
Why your pension can shrink even though the rate went up
The Age Pension has two means tests: an income test and an assets test. Centrelink works out your pension under both and pays you the lower of the two.
Under the income test, the first $226 a fortnight of income is free for a single person ($396 a fortnight combined for a couple). Above that, the pension is reduced by 50 cents for every dollar of income for singles (25 cents each for couples). Deemed income feeds straight into this test, on top of any work income, rent or other income.
Take a single pensioner with $250,000 in the bank and no other income. They are now deemed to earn $309.19 a fortnight, up from $261.12 before the change. Under the income test alone, their pension goes from $1,183.34 to $1,196.10 a fortnight — a rise of $12.76, not $36.80. The rest of the increase was cancelled out by the higher deeming rate.
For years the assets test was the one that mattered for most people. With deeming frozen at 0.25% and 2.25%, the income test rarely cut into a homeowner’s pension before the assets test did. The rises have flipped that for a wide band of people: a single homeowner can now face an income-test reduction from around $192,000 in financial assets, even though the full-pension assets threshold sits at $333,000. Being under the assets limit no longer means a full pension.
Who feels it most
- Singles with moderate savings — the income test now starts to bite from around $192,000–$195,000, well below the $333,000 assets limit for single homeowners.
- Couples — the income test can start reducing payments from around $334,000 combined, even with the $499,000 homeowner assets limit.
- Non-homeowners — because their assets limits are higher ($600,000 for singles, $766,000 for couples), the income test sets the pension across a much wider range.
- People just under the assets limit — many expected a full pension and are now surprised to receive a part pension.
- Commonwealth Seniors Health Card holders — card eligibility is based on income ($105,048 a year for singles, $168,076 for couples), and higher deeming reduces how much you can hold before hitting the limit.
Pensioners with little in savings feel nothing: if your deemed income stays under the free area, the whole $36.80 (or $55.60) increase reaches you. Part-pensioners whose only other income is wages also get the full rise, because the $226 free area and the 50-cent taper did not move — and the first $300 a fortnight of work income is ignored under the Work Bonus.
What to do about it
- Check your own payment first. Your current rate shows in your Centrelink online account through myGov or the Express Plus app. Compare it with what you expected before assuming the worst.
- Work out which test sets your pension. Ask yourself which of the two tests is actually reducing your payment — not just how close you are to the assets limit. This decides whether any change you make will help.
- Report changes on time. If your income, assets, rent or relationship status change, tell Services Australia promptly so your payment stays accurate and you avoid debts.
- Do not rush to move money. Gifting and deprivation rules, tax, and the flow-on effects for your income and estate can turn a quick fix into a bigger problem. Get advice before shuffling assets to beat the income test.
- Make your money work harder. Since you are assessed on deemed income either way, earning a better real return costs you nothing under the test — savings accounts paying 5% or more are easily found.
- Get personal advice if you are unsure. A Centrelink Financial Information Service officer is free, or talk to a licensed financial adviser about your own situation.
Frequently asked questions
What is the qualifying age for the Age Pension?
The qualifying Age Pension age is 67. Reaching 67 does not automatically qualify you — you also need to meet the residency rules (generally at least 10 years as an Australian resident) and pass the income and assets tests.
Are my savings really counted as income even if they earn almost nothing?
Yes, for the Age Pension income test. Centrelink applies the deeming rates to your financial assets and counts the result as income, regardless of what you actually earn. That is why a low-interest savings account can reduce your pension more than the interest is worth.
Does deeming affect my family home?
No. Your principal home is exempt from the assets test, and investment properties are assessed on the rent you actually receive rather than being deemed.
When do deeming rates change again?
Pension rates are indexed every March and September. Deeming rates have moved on those same dates over the past year. The next indexation date is 20 March 2027.
Can my pension go down because of this?
The September increase itself did not cut anyone’s pension, but for some pensioners with larger savings the higher deeming rate offset most of the increase — so their net rise was smaller than the headline $36.80 (or $55.60 for couples). Future indexation could move individual payments either way depending on which test applies.
Is the Age Pension taxable?
The Age Pension is taxable income, although tax is not automatically deducted from every payment. You can ask Services Australia to withhold tax if that suits you.
This article is general information only and is not personal financial advice. It was prepared without considering your objectives, financial situation or needs. Talk to Services Australia or a licensed adviser about your own circumstances.
