Age Pension and Deeming Rates Update: What Changes on 20 March 2026 Mean for Your Pocket

Two significant changes to the Age Pension are taking effect on 20 March 2026, and for many retirees they pull in opposite directions. Pension payments are going up thanks to cost-of-living indexation, but deeming rates are also rising at the same time, which means the government is effectively giving with one hand and taking away with the other. Here is what you need to know.

The Good News: Pension Payments Are Increasing

Twice a year the Age Pension is indexed to keep pace with inflation. With the Consumer Price Index rising 1.9% in the second half of 2025, pensioners will see a meaningful lift in their fortnightly payments from 20 March 2026.

The new fortnightly rates, which include the Maximum Basic Rate and the Pension Supplement, are as follows:

For singles, the new total fortnightly payment will be $1,200.90, an increase of $22.20 per fortnight or $577.20 over a full year.

For couples, each partner will receive $905.20 per fortnight, up $16.70 each, with the combined fortnightly payment rising to $1,810.40, an increase of $33.40 or $868.40 annually.

The Energy Supplement remains unchanged at $14.10 for singles and $10.60 for each member of a couple.

The Catch: Deeming Rates Are Also Rising

For the second time in six months, the government is lifting deeming rates to reflect higher returns available in financial markets. This is the part of the announcement that many part-pensioners will feel most directly.

Deeming rates are the rates Centrelink uses to estimate how much income your financial assets are generating, regardless of what they are actually earning. When deeming rates rise, Centrelink assumes your assets are producing more income, which can reduce your pension entitlement under the income test.

From 20 March 2026 the new deeming rates will be 1.25% on the first $64,200 of financial assets for singles (or $106,200 for couples), up from 0.75% previously. For assets above those thresholds, the rate rises to 3.25%, up from 2.75%.

How the Two Changes Interact

Whether you come out ahead, break even, or end up worse off depends on your individual circumstances.

If you receive the full Age Pension and have minimal financial assets, you will most likely enjoy the full benefit of the indexation increase without any offset from the deeming changes.

If your pension is already reduced under the income test, the higher deeming rates may eat into your $22.20 fortnightly increase, partially or fully depending on the size of your financial assets.

If you are holding a large amount of cash, perhaps from a recent property sale, or if you are close to the income threshold for the Commonwealth Seniors Health Card, the higher deemed income could push you over eligibility limits and affect your entitlements more significantly than the pension rise compensates for.

What You Should Do Next

These changes affect everyone differently, and the net impact on your fortnightly payment depends on your specific combination of assets, income, and living situation. If you are uncertain about where you stand, it is worth reviewing your position before 20 March or speaking with a financial adviser who specialises in retirement income.

The key questions to ask yourself are whether your pension is income-tested or assets-tested, how much you hold in financial assets like cash, shares, or managed funds, and whether you are currently close to any eligibility thresholds for the pension or the Commonwealth Seniors Health Card.

Getting clarity on those points before the changes take effect will help you understand whether you are genuinely better off from March, or whether the deeming increase has quietly offset the benefit of the indexation rise.

The information in this article is general in nature and does not constitute financial advice. We recommend speaking with a licensed financial adviser to understand how these changes apply to your personal circumstances.

FAQ

When do these changes take effect? Both the new pension rates and the higher deeming rates come into effect on 20 March 2026.

Will everyone on the Age Pension receive the full increase? Not necessarily. Full pensioners with minimal financial assets will likely receive the complete indexation boost. Part-pensioners subject to the income test may find the increase is partially offset by higher deemed income.

What are deeming rates and why do they matter? Deeming rates are the rates Centrelink uses to calculate how much income your financial assets are assumed to be earning. Higher deeming rates mean Centrelink assumes your assets produce more income, which can reduce your pension entitlement under the income test even if your actual returns have not changed.

Who is most at risk of being worse off? Part-pensioners with significant financial assets, people holding large cash amounts from a property sale, and those near the income threshold for the Commonwealth Seniors Health Card are most likely to feel the impact of the deeming rate increase.

Where can I get personalised advice? A licensed financial adviser who specialises in retirement income can help you model the impact of these changes on your specific situation. Services like Retirement Essentials also offer tools to estimate your new payment based on your individual circumstances.