If your pension payment changed after 20 March and nothing in your own accounts did, this is almost certainly why. It comes down to one rule most retirees have never had reason to think about — the deeming rate.

You checked your statement, saw a different number, and then checked your accounts. Same balances. Same dividends. Same interest. Nothing in your own world changed — yet Centrelink is paying you a little less. If you’ve been wondering why has my Age Pension dropped 2026, the answer usually isn’t your portfolio, and it isn’t anything you did wrong.

Here’s the reassuring part: the worry tends to ease the moment the mystery does. What weighs on people is rarely the smaller number itself — it’s not understanding why it happened or what it means.

So let’s take the weight off this one. Here’s what is the deeming rate for pensioners in Australia, what changed on 20 March 2026, who it affects most, and exactly what to do next.

What is the deeming rate for pensioners in Australia?

The deeming rate is the assumed rate of return Centrelink applies to your financial assets when working out your Age Pension under the income test. Rather than tracking what your bank account, shares or managed funds actually earn, Centrelink simply “deems” them to earn a set percentage — and counts that figure as deemed income.

So when people ask what are deeming rates, the short version is this: they’re a shortcut. Instead of chasing every dividend and interest payment, Centrelink assumes a rate and applies it to everyone equally. From 20 March 2026, the rates are 1.25% and 3.25%, depending on how much you hold.

Source: Services Australia, current 20 March 2026 – 19 September 2026. The middle and right columns are the deeming rates for couples — worth checking which applies to you.

The crucial point: deeming ignores your real returns. If your money earns more than the deemed rate, the extra doesn’t count against you. But if it earns less — as plenty of cash and term-deposit holders do — you’re still assessed as though you hit the deemed figure.

What counts as a financial asset

Savings and term deposits, listed shares and securities, managed funds and bonds, and superannuation once it’s in pension phase. Your family home is not counted, and the value of an investment property is not deemed (though any rent you receive is assessed separately as income).

Official source: Services Australia — Deeming (current rates, thresholds and what counts as a financial asset)

What the deeming rate increase 2026 actually changed

For around five years, deeming rates sat at 0.25% (lower) and 2.25% (upper). They were deliberately held there — frozen — through the run of interest-rate rises that began in 2022, which shielded pensioners while the cash rate climbed. That freeze ended in 2025. Rates then rose 0.5% on 20 September 2025, and another 0.5% on 20 March 2026.

Together, that’s a full one-percentage-point increase on both tiers since the freeze ended:

One reason it’s easy to miss: the increase landed on the same day as regular pension indexation, which lifted the full single Age Pension by about $22.20 a fortnight and the couple rate by around $33.40 combined. For some retirees, indexation softened the deeming change. For others — particularly part-pensioners with a solid pool of financial assets — the deeming rise outweighed the indexation, and the payment went down.

Official source: Australian Government Actuary — Deeming rate recommendation (the body that recommended the March 2026 change)

Why your pension fell even though your income didn’t

This is the part that catches people out.

Your investments didn’t earn a cent more, but Centrelink now assumes they do — and under the Age Pension income test, every extra dollar of assessed income reduces your pension.

There’s a simple way to picture it. Because both tiers rose by exactly 0.5%, every dollar of financial assets is now deemed to earn 0.5% more than before:

That’s $500 a year you’re now deemed to earn per $100,000 of financial assets — whether or not it actually arrived. If you’re assessed under the income test and already above the free area, that works out to about $250 a year less pension per $100,000.

How to calculate deemed income yourself

Take the lower-rate portion of your financial assets and multiply by 1.25%. Take the rest and multiply by 3.25%. Add them together — that’s your annual deemed income. Two worked examples:

Official source: Services Australia — Income test for Age Pension (how deemed income reduces your payment)

How are deeming rates set — and who decides?

Deeming rates aren’t set by Centrelink, and there’s no fixed public formula.

They’re recommended by the Australian Government Actuary and formally determined by the Minister for Social Services, with the stated aim of reflecting what investment markets are realistically returning. Historically — before the freeze — the lower rate tracked closely to the RBA cash rate, with the upper rate a margin above it.

The rates are reviewed and can change twice a year, around 20 March and 20 September, the same dates as pension indexation, and changes are usually announced about a month ahead. That twice-yearly rhythm is why it’s worth checking your statement each March and September rather than assuming your payment holds steady.

Official source: Moneysmart (ASIC) — Age Pension & government benefits (independent guide; confirms rates are adjusted each 20 March and 20 September)

Does deeming apply to your super and account-based pension?

For most retirees, yes. Once you reach Age Pension age, superannuation in pension phase is treated as a financial asset and deemed — regardless of how much you actually draw from it. Drawing more, drawing less, or leaving it untouched doesn’t change the deemed figure; the assumed rate is applied to the balance either way.

There’s one important exception. If you started an account-based pension before 1 January 2015 and have continuously received income support since, it may be “grandfathered” — assessed under the older deductible-amount rules rather than deeming. The same can apply for Commonwealth Seniors Health Card holders who’ve held the card and the same pension since before that date. If that’s you, changing or restarting the pension can quietly cancel the concession, so it’s worth advice before touching it.

Official source: Services Australia — Income streams (how account-based pensions are deemed, and the pre-1 January 2015 grandfathering rules)

What else does deeming affect?

Other payments and concessions that use deeming

JobSeeker Payment, Disability Support Pension, Carer Payment, Service Pension and Veteran Payment, the Income Support Supplement, and the Commonwealth Seniors Health Card income test. Deeming is also used to work out means-tested contributions for aged care — so a higher deemed income can lift what you’re asked to pay toward care, too.

For self-funded retirees, the Commonwealth Seniors Health Card is the one to watch: higher deemed income can push you over the card’s income test and cost you cheaper medicines and concessions, even if you receive no pension at all.

Official sources: Services Australia — Commonwealth Seniors Health Card · My Aged Care — Income and assets assessments

Who’s affected — and who isn’t

You’re likely affected if…

You’re a part-pensioner assessed under the income test whose deemed income sits above the free area ($218 a fortnight for singles, $380 combined for couples). The more financial assets you hold, the more the change matters. A self-funded retiree near the part-pension or Commonwealth Seniors Health Card cut-offs can also be tipped over a threshold. The part pension deeming rates change is felt most by this group — and there are well over 400,000 income-tested part-pensioners, plus around half a million card holders, across Australia.

You’re generally not affected if…

You receive the full pension and your income is under the free area; or you’re assessed under the assets test rather than the income test, in which case the deeming change doesn’t alter your result. Deeming only decides your payment when the income test is the one producing the lower pension — Centrelink always pays whichever test gives the lower amount.

Official source: Services Australia — Assets test for Age Pension (to see whether the income test or assets test sets your pension)

What usually happens in practice

When deeming rates move, a few patterns tend to repeat. The most common is uncertainty: people see a smaller payment and assume they’ve done something wrong, or that their investments have failed them. Usually neither is true — it’s the deeming rate working exactly as designed, assuming a set return whatever your money actually earns.

The second is that many retirees don’t know which test is setting their pension. Centrelink runs both and pays whichever gives the lower amount, so on checking, a good number turn out to be assessed under the assets test — meaning the March change didn’t affect them at all, and the worry was unnecessary. For those on the income test, the fix is rarely dramatic; it’s usually about making sure Centrelink is working from accurate, current figures and that the way the money is held still suits the person.

The sound approach is the same either way: confirm the facts before changing anything. Check the current rates against Services Australia and the Australian Government Actuary, work out which test applies, then look at whether anything is worth adjusting. Clarity first — calm tends to follow.

Your 5-minute deeming check

You can’t change the deeming rate, but you can make sure it’s applied fairly.

Here’s the short checklist I walk through with clients:

Official source: Services Australia — Income (how to update your savings, shares and income-stream details via myGov)

Common mistakes to avoid

Frequently asked questions