Australia’s pension system relies on a complex set of rules to determine how much retirees receive. One of the most important — but often misunderstood — rules involves deeming rates.
In 2026, the government has confirmed an adjustment that could affect the retirement income of many pensioners: deeming rates rising to 3.25%.
For retirees who rely on savings and investments, the change could influence how Centrelink calculates their income and, ultimately, their Age Pension payments.
What Are Deeming Rates?
Deeming rates are used by Centrelink to estimate the income a pensioner earns from financial investments.
Instead of calculating actual earnings, Centrelink assumes a set return on assets such as:
- Bank savings
- Shares
- Managed funds
- Superannuation accounts
This estimated return is then used when assessing pension eligibility.
Why Deeming Rates Are Changing
Deeming rates are designed to reflect broader economic conditions.
When interest rates rise or financial markets change, governments may adjust deeming rates to better reflect expected investment returns.
The move to 3.25% is intended to align with current financial conditions.
How It Could Affect Pension Payments
If the assumed income from savings increases, some pensioners may see:
- Reduced Age Pension payments
- Changes to part-pension eligibility
However, the impact depends on each person’s financial situation.
Example of Deeming Impact
| Financial Assets | Deemed Income (3.25%) |
|---|---|
| $100,000 | $3,250 annually |
| $200,000 | $6,500 annually |
This estimated income is included in the pension income test.
Frequently Asked Questions (Q&A)
1. What is a deeming rate?
An assumed investment return used to calculate pension income.
2. Why are deeming rates increasing?
To reflect economic conditions.
3. Who is affected?
Pensioners with financial investments.
4. Will all pensions decrease?
Not necessarily.
5. Does this affect savings accounts?
Yes.
6. Does super count?
Yes, depending on circumstances.
7. Can pension payments increase?
Usually not from deeming changes.
8. Does the family home count?
No.
9. How often do deeming rates change?
Periodically based on policy decisions.
10. Can pensioners appeal assessments?
Yes.
11. Are shares included?
Yes.
12. Do couples share deeming calculations?
Yes, combined financial assets are assessed.
13. Where can pensioners check calculations?
Through Centrelink.
14. Is the rule nationwide?
Yes.
15. Does this affect new retirees?
Yes, if they have financial assets.
Deeming rules play a critical role in determining Age Pension payments. As the rate rises to 3.25% in 2026, retirees with financial assets may need to review how their savings affect their pension eligibility.
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