14 October 2026

Deeming rates have gone up three times in a year. Here's why your Age Pension might care

What's changed

From 20 September 2026, the deeming rates used to assess Age Pension income went up again. The new rates are 1.75% on the first $66,800 of financial investments for a single person ($110,600 for a couple), and 3.75% on everything above that.

That's the third 0.5 percentage point rise in about 12 months, following increases in September 2025 and March 2026. Before that, the rates had been frozen at 0.25% and 2.25% since 2020.

Deeming means Centrelink assumes your financial investments earn a set rate, regardless of what they actually earn; bank accounts, term deposits, shares, managed funds and account-based pensions are all deemed. Your home is exempt, and rental properties are based on net rent.

Two tests, and the lower result wins

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 amount.

For years, the assets test was the one that mattered. With deeming at 0.25% and 2.25%, the income test rarely cut into a homeowner's pension before the assets test did. Higher deeming has changed that.

What's different now

Take a single homeowner with all their assessable assets in financial investments and no other income. Before deeming rose, the income test only set their pension in a narrow sliver, between roughly $320,000 and $335,000. Today it sets their pension from about $192,000 up to about $378,000.

For a couple who own their home, the income test now sets the pension from about $334,000 to about $551,000 combined. Before the rises, it didn't set it at all.

The effect is biggest for people just under the assets test limit, who used to expect a full pension. A few examples:

The catches

1. Being under the assets limit doesn't mean a full pension. The full pension assets limit for a single homeowner is $333,000, but on these assumptions the income test starts reducing the pension from around $192,000.
2. Renters feel it most. Non-homeowners have higher asset limits, so the income test sets their pension across a much wider range, up to about $729,000 for a single person and $903,000 for a couple. For a single non-homeowner with roughly $380,000 to $710,000, September's pension increase didn't fully make up for the deeming rise, and they ended up with up to about $790 a year less. Homeowners on the same assumptions didn't see a net reduction.
3. What you actually earn doesn't matter. Two people with the same investments are assessed the same, even if one earns far more than the other.
4. Other income counts too. Work income, rent and other income also go through the income test and use up the room before the pension starts to reduce. The first $300 a fortnight of work income is disregarded under the Work Bonus, but anything above that counts.
5. The settings keep moving. Pension rates are indexed each March and September, and deeming rates have moved on those dates over the past year. The next date is 20 March 2027.

What this means for your planning

This is general information, not a recommendation. But a few questions are worth asking:

One caution: be wary of moving money in a hurry to fix a deeming problem. Gifting and deprivation rules, tax, and the knock-on effects for your income and estate can all turn a quick fix into a bigger problem.

Where to start

If you receive the Age Pension, or you're approaching it, and you're not sure which test sets your payment, get in touch before you make changes to your investments. We can work out which test applies to you and what's likely to happen if the rules move again.

Sources
Services Australia and Department of Social Services, Age Pension rates, thresholds and deeming rates from 20 September 2026; Office of the Australian Government Actuary, deeming rate recommendation (31 July 2026). Examples are Funded Futures modelling and are illustrative only.

Funded Futures Financial Services Socials