Increase in Centrelink Deeming Rates by 50 basis points

The Centrelink deeming rates will be increased to 1.25% (“below threshold rate”) and 3.25% (“above threshold rate”) from, respectively, 0.75% and 2.75%. 

This 50 basis point (aka 0.5%) increase will apply from 20 March 2026.

In the case of a single pensioner, the threshold rate applies to the first $64,200 of financial assets with the above threshold rate applying to the balance above that limit.  In the case of a pensioner couple, the below rate applies to the first $106,200 of the couples combined financial assets, with the above rate applying to the balance above that limit.  These limits are indexed each 1 July by reference to the increase in the CPI.  The current limits are those applying as at 1 July 2025.

Deeming rates are used to determine the amount of income from financial assets (such as bank deposits, super balances which is to be counted for the Centrelink incomes test for the age pension (and for certain other Centrelink income payments).  By increasing the deeming rates by 50 basis points, more income will be counted to determine the entitlement to and the amount of the age pension.

The increase in the deeming rates will also affect the deeming test applied to determine the entitlement to and the amount of the age service pension paid by the Department of Veterans’ Affairs and the capacity of individuals to make co-contributions of in-home and residential aged care under the Aged Care Act 2024.

The adverse impact of the 50 basis points increase will, to some extent, be dampened by the increase in the age pension as at 20 March 2026; by any increase in the “income free area” (which is the amount of income per fortnight which can be received before there is any reduction in the age pension rate) and by the expected increase in the deeming thresholds as at 1 July 2026.  It is, therefore, difficult to quantify the adverse impact.

This increase in the deeming rates follows on from policy changes announced on 20 August 2025, when the Government announced that deeming rates (which had been held at artificially low rates since May 2020 as a Covid-19 response) would be adjusted more frequently, to more accurately reflect investment returns from financial assets and having regard to the advice of the Australian Government Actuary (presumably, so that the Actuaries can be blamed for the increase in the deeming rates).  Consequently, it is possible that deeming rates may be adjusted annually, if not every 6 months.

The increased deeming threshold rates are set out in the Social Security (Deeming Threshold Rates) Determination 2026, issued by the Minister for Social Security: Federal Register of Legislation Reference F2026L00137.