Age Pension Deeming Rates from 20 March 2026: 1.25% and 3.25% Worked Examples
From 20 March 2026, Centrelink "deems" your financial assets to earn a set return regardless of what they actually earn: 1.25% on the first $64,200 of assets if you're single (or $106,200 combined for a couple), and 3.25% on everything above that. That deemed amount becomes your assessable income for the income test — so this single calculation can decide whether you get the full pension, a part pension, or nothing.
The 0.75% / 2.75% rates that had been frozen since May 2020 ended on 20 March 2026. The new rates are higher, which means a slightly larger deemed income for the same savings — and that matters most for retirees sitting near a pension cut-off. Below, two named worked examples walk through the exact arithmetic, then we trace how the deemed figure flows into the 50c income-test taper.
What "deeming" actually is
Deeming is a set of rules Services Australia uses to estimate the income from your financial assets — bank accounts, term deposits, shares, managed funds, most superannuation in the accumulation or account-based pension phase once you reach Age Pension age, and money in loans you've made. Instead of asking what each account really paid, Centrelink assumes a fixed rate of return. This keeps the income test simple and stops people losing pension just because they chase a high-interest account one fortnight.
Two rates apply, split at a threshold:
- Lower rate — 1.25% per year on the first slice of your financial assets.
- Upper rate — 3.25% per year on the balance above the threshold.
The thresholds are different for singles and couples, and they're indexed on 1 July each year — the figures below are those in force from 20 March 2026.
The 2026 deeming rates and thresholds at a glance
| Your situation | 1.25% (lower) applies to | 3.25% (upper) applies to |
|---|---|---|
| Single | First $64,200 | Balance above $64,200 |
| Couple — at least one on a pension | First $106,200 (combined) | Combined balance above $106,200 |
| Couple — neither on a pension | First $53,100 each | Each person's balance above $53,100 |
Source: Services Australia — Deeming. Rates effective 20 March 2026: lower rate rose from 0.75% to 1.25%; upper rate rose from 2.75% to 3.25%.
Margaret is single with $150,000 in financial assets. She has $40,000 in a savings account, $60,000 in a term deposit, and $50,000 in an account-based pension. Because she's over Age Pension age, all $150,000 counts as financial assets, so the whole lot is deemed.
Step 1 — Lower slice (1.25%): the first $64,200.
$64,200 × 1.25% = $802.50 per year.
Step 2 — Upper slice (3.25%): everything above $64,200.
$150,000 − $64,200 = $85,800.
$85,800 × 3.25% = $2,788.50 per year.
Step 3 — Add the two slices:
$802.50 + $2,788.50 = $3,591.00 deemed income per year.
Step 4 — Convert to a fortnight: Centrelink assesses income per fortnight, so divide by 26.
$3,591.00 ÷ 26 = $138.12 per fortnight (rounded).
It does not matter that Margaret's accounts actually earned, say, $4,800 last year — only the deemed $138.12 a fortnight goes into the income test.
The same example, in a table
| Slice | Amount | Rate | Deemed income / year |
|---|---|---|---|
| Lower | $64,200 | 1.25% | $802.50 |
| Upper | $85,800 | 3.25% | $2,788.50 |
| Total | $150,000 | — | $3,591.00 ($138.12 / fortnight) |
Geoff and Helen are a couple, and at least one of them receives a pension. They have $300,000 in combined financial assets. For a deeming purposes a couple is assessed on the combined pool, using the couple threshold of $106,200.
Step 1 — Lower slice (1.25%): the first $106,200 combined.
$106,200 × 1.25% = $1,327.50 per year.
Step 2 — Upper slice (3.25%): the balance above $106,200.
$300,000 − $106,200 = $193,800.
$193,800 × 3.25% = $6,298.50 per year.
Step 3 — Add the slices:
$1,327.50 + $6,298.50 = $7,626.00 deemed income per year.
Step 4 — Per fortnight: $7,626.00 ÷ 26 = $293.31 per fortnight.
This $293.31 is the couple's combined deemed income from these assets. It's added to any other income (work, rent, foreign pensions) and then run through the couple income test.
How the deemed total flows into the income test
Deeming produces an income figure. That figure then joins any other assessable income and is run through the Age Pension income test, which works on a free area plus a 50c taper:
- Single: the first $218 of income per fortnight is free. Above $218, the pension reduces by 50 cents for every extra dollar.
- Couple (combined): the first $380 of combined income per fortnight is free. Above $380, the combined pension reduces by 50 cents per extra dollar (25c each in practice).
Source: Services Australia — Income test for Age Pension (free areas and taper effective 20 March 2026).
Tracing Margaret's figure through the income test
Margaret's deemed income is $138.12 a fortnight. Assume that's her only income.
- Income free area (single): $218 a fortnight.
- Her income of $138.12 is below $218.
- So $138.12 sits inside the free area — $0 reduction. Margaret's pension is not cut by the income test (the assets test is assessed separately, and she'd receive whichever test produces the lower rate).
Tracing Geoff and Helen's figure through the income test
Their deemed income is $293.31 a fortnight. Say Geoff also earns $400 a fortnight part-time, so combined income is $693.31.
- Couple income free area: $380 a fortnight.
- Income above the free area: $693.31 − $380 = $313.31.
- Reduction at 50c: $313.31 × $0.50 = $156.66 off the combined fortnightly pension.
That $156.66 reduction is shared — the couple's combined pension drops by $156.66 a fortnight, i.e. roughly $78.33 each. Centrelink then compares this income-test result with the assets-test result and pays the lower of the two.
- From 20 March 2026 the deeming rates are 1.25% (lower) and 3.25% (upper) — up from the frozen 0.75% / 2.75%.
- The lower rate applies to the first $64,200 (single) or $106,200 (couple combined) of financial assets; the upper rate applies to the balance.
- Single with $150,000 → $3,591/year deemed = $138.12/fortnight. Couple with $300,000 → $7,626/year = $293.31/fortnight.
- The deemed figure is added to other income, then the income test applies a 50c-per-dollar taper above the free area ($218 single / $380 couple per fortnight).
- Centrelink runs both the income test and the assets test and pays whichever gives the lower pension.
Common mistakes to avoid
- Thinking your real interest rate matters. It doesn't for deeming — only the deemed rate is counted, whether your account pays more or less.
- Forgetting super counts once you're Age Pension age. Account-based pensions and accumulation super become deemed financial assets at that point.
- Using a single threshold for a couple. Couples are deemed on the combined pool against the $106,200 threshold, not $64,200 each.
- Assuming deeming alone decides your pension. It feeds the income test; the assets test runs in parallel and can be the binding one.
Frequently asked questions
What are the deeming rates for the Age Pension in 2026?
From 20 March 2026, the lower deeming rate is 1.25% and the upper rate is 3.25%. The lower rate applies to the first $64,200 of financial assets for a single person (or $106,200 combined for a couple), and the upper rate applies to everything above that threshold.
How do I work out my deemed income?
Apply 1.25% to the portion of your financial assets up to the threshold, apply 3.25% to the balance above it, add the two together for an annual figure, then divide by 26 to get the fortnightly amount Centrelink assesses. For a single person with $150,000, that's ($64,200 × 1.25%) + ($85,800 × 3.25%) = $3,591/year, or $138.12 a fortnight.
Are the deeming rates higher than before?
Yes. The rates had been frozen at 0.75% (lower) and 2.75% (upper) since May 2020. On 20 March 2026 they rose to 1.25% and 3.25%, so the same savings now produce a slightly higher deemed income.
Does my actual interest rate affect deeming?
No. Deeming uses fixed assumed rates regardless of what your accounts really earn. If your investments earn more than the deemed rate, the extra isn't counted; if they earn less, you're still deemed to earn the set rate.
How does deemed income reduce my pension?
Your deemed income is added to any other income, then the income test applies. The first $218 a fortnight (single) or $380 (couple combined) is free; above that, the pension reduces by 50 cents for every extra dollar of income.
Is super counted under deeming?
Once you reach Age Pension age, your superannuation — both accumulation and account-based pensions — is generally treated as a financial asset and is deemed, along with bank accounts, shares and managed funds.
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Official sources: Services Australia — Deeming · Services Australia — Income test for Age Pension. Always confirm current figures on servicesaustralia.gov.au before acting.