Australian retirees relying on Centrelink payments face a tough new reality as deeming rates rise again on March 20, 2026. Financial experts warn of a “double whack” from this change combined with ongoing indexation adjustments, potentially slashing Age Pension amounts for thousands.
Understanding Deeming Rates
Deeming rates assume a fixed return on financial assets like savings accounts and superannuation investments, regardless of actual earnings. Centrelink uses these rates to calculate income for means-tested benefits such as the Age Pension. The lower rate applies to the first portion of assets, while the higher rate kicks in beyond set thresholds, directly impacting pension eligibility and payment levels.
The Double Whack Explained
Financial advisor Nick Bruining coined the “double whack” term, highlighting how the 0.5% deeming rate increase hits part-pensioners hardest. Many could lose their partial pension entirely, while full pension recipients see reductions despite semiannual payment boosts. This comes atop broader cost-of-living pressures, squeezing budgets for those with modest investments.
Key Rate Changes
Effective March 20, the lower deeming rate jumps from 0.75% to 1.25% on assets up to $64,200 for singles or $106,200 for couples combined. The upper rate rises from 2.75% to 3.25% on excess amounts. These thresholds determine where the steeper assumption applies, amplifying effects for larger portfolios.
| Deeming Rate Type | Previous Rate | New Rate (March 20, 2026) | Asset Threshold (Singles/Couples) |
|---|---|---|---|
| Lower Rate | 0.75% | 1.25% | Up to $64,200 / $106,200 |
| Upper Rate | 2.75% | 3.25% | Above thresholds |
Impact on Pensioners
Part-pensioners with around $308,000 in assets might drop to zero pension entitlement under the new math. Even account-based pension holders face higher deemed income calculations, ignoring real payouts and basing assessments on balances alone. Full pensioners on the margins could forfeit $20-50 fortnightly after offsets, worsening financial strain amid rising living costs.
Expert and Group Reactions
National Seniors Australia calls the hike “measured and modest,” noting upper rates remain below term deposit yields and cash rates. CEO Chris Grice stresses gradual changes protect vulnerable seniors. COTA’s Patricia Sparrow agrees on the prudent pace but flags digital access issues, as one in seven pensioners struggles with online banking.
Indexation Offset
The changes align with March indexation, adding $22.20 fortnightly to full single Age, Disability Support, or Carer Payments. JobSeeker, Rent Assistance, and others rise too, but deeming effects may erase gains for many. Retirees should review assets via myGov to anticipate shifts.
Advice for Retirees
Experts urge checking Centrelink statements and consulting advisors before March 20. Strategies include gifting assets within rules or shifting to exempt investments like the family home. Staying informed prevents surprises, especially for Commonwealth Seniors Health Card holders facing eligibility tests.
FAQs
Q: When do the new deeming rates start?
A: March 20, 2026.
Q: Who is most affected?
A: Part-pensioners with financial assets near thresholds.
Q: Will pensions increase overall?
A: Indexation adds amounts, but deeming may reduce net for some.
