Chloe KennedyThe six-year protection is over. On 20 March 2026, the Federal Government allowed Australia's social security deeming rate freeze to thaw — sending the lower deeming rate from 0.25% to 1.25%, and the upper rate from 2.25% to 3.25%. For the 2.5 million Australians who depend on the Age Pension, this is the most significant change to payment calculations since 2020.
What Changed on 20 March 2026
Since 1 May 2020, deeming rates had been frozen at record lows to protect retirees during the pandemic and its economic aftermath. That freeze is now over.
The new deeming rates, confirmed by the Department of Social Services, are:
- Lower deeming rate: 1.25% on the first $64,200 of financial assets for singles ($106,200 for couples)
- Upper deeming rate: 3.25% on financial assets above those thresholds
These replaced the long-frozen levels of 0.25% and 2.25%. The assumed income from financial assets has jumped by a full percentage point at every level.
The same date brought higher Age Pension payment rates. Maximum fortnightly payments are now:
- $1,200.90 for a single person
- $905.20 for each member of a couple
Why Deeming Rates Matter to Your Pension
Deeming is how Centrelink estimates the income your financial assets are expected to generate, regardless of their actual returns. That estimated figure feeds into the income test, which determines your entitlement.
Here is why the jump hurts even though your payment rate went up: if your savings are deemed to earn more, your assessed income rises. Once assessed income exceeds the free area — $212 per fortnight for singles, $372 combined for couples — your pension reduces by 50 cents for every dollar of excess. For pensioners holding larger balances, the deeming rate increase can wipe out the payment rise entirely.
Consider a single pensioner with $200,000 in term deposits and savings. Under the old 0.25% and 2.25% structure, their deemed annual income from those assets totalled roughly $3,920. Under the new 1.25% and 3.25% rates, that figure jumps to approximately $7,620 — nearly double, despite no change in their actual returns or spending needs.
The Access Gap: Not All Retirees Can Earn the Deemed Rate
The deeming framework assumes retirees can access competitive interest rates through online savings accounts and high-yield term deposits. COTA Australia's research tells a different story: approximately one in seven pensioners are not confident using online banking services.
If you are holding funds in a legacy branch-based account earning 0.5% or less, Centrelink is now deeming that money to earn 1.25% — a gap that reduces your pension with no corresponding benefit to your wallet.
This disconnect is why financial advisers have been urging retirees to review their asset structures urgently. The rate change is already in effect, which means your most recent Centrelink payment may already reflect the new, higher deemed income figure.
What Pensioners Should Check Right Now
Review your Centrelink income test calculation. Log into myGov or contact Services Australia directly to verify your current assessed income. If you have not checked since March 20, your entitlement may have shifted.
Look at where your cash is sitting. If your savings earn less than 1.25%, the gap between deemed and real income is costing you pension dollars that are not returning any actual investment income. Shifting to a competitive savings account or term deposit could close that gap.
Check the assets test as well. Two tests run in parallel: the income test and the assets test. Your pension is calculated under whichever test produces the lower entitlement. Many Australians focus on one and overlook the other. A licensed wealth adviser can model both outcomes for your specific situation.
Consider whether superannuation income streams suit your circumstances. Account-based pensions are assessed differently from ordinary bank deposits under Centrelink rules. Depending on your age, super balance, and when the pension started, restructuring may be worth exploring. For more on what changed with superannuation in 2026, see what Australian retirees need to know about superannuation changes this year.
The Broader Context: Inflation, Rate Decisions, and Retirement Income
Deeming rate changes do not happen in isolation. Australians are managing the combined pressures of stagflation and persistent inflation in 2026 that affect the real purchasing power of pension income. Higher interest rates have pushed term deposit returns up — which partly justifies rising deeming rates — but living cost increases are outrunning income gains for many pensioners on fixed entitlements.
The net effect depends heavily on individual circumstances: how much you hold in financial assets, where those assets sit, and whether any are already sheltered in compliant superannuation structures.
Who Is Most Exposed
Pensioners most at risk of a net payment reduction after the deeming rate thaw include those who:
- Hold significant cash balances above the lower deeming threshold ($64,200 for singles)
- Have assets in older, lower-rate savings accounts or notice accounts
- Have not reviewed their Centrelink record since the freeze was in place
- Are near the income test taper threshold, where even small assessed income rises cut payments
If none of these apply — for example, if most of your wealth is in the family home, which is generally exempt from the income test — the March 2026 changes may have had little or no impact on your pension entitlement.
When to Speak to a Wealth Management Adviser
The only way to know your position with certainty is to model it specifically. A licensed wealth management adviser can:
- Calculate your new assessed income under the 1.25% and 3.25% deeming structure
- Identify whether restructuring your financial assets would improve your pension position within the law
- Assess whether account-based pension products or other compliant income streams suit your situation
- Advise on strategies ahead of any further government review of deeming rates
ExpertZoom connects Australians with qualified wealth management professionals who specialise in retirement income, Centrelink planning, and superannuation strategy. If your pension situation has shifted since 20 March 2026, a targeted consultation can clarify exactly where you stand.
This article provides general information only and does not constitute financial advice. Please consult a licensed financial adviser for guidance specific to your personal circumstances.
