Centrelink Deeming Rates Rise: What Changes March 20 – February 25
Centrelink deeming rates are changing on 20 March, lifting to 1.25% and 3.25%. At the same time, the Age Pension increase will add about $22.20 a fortnight to eligible payments. As at 25 February, this mix tightens means testing while adding cash to households. We explain what the deeming rate changes mean, how March 20 payments will look, and the likely impact on retirees’ budgets and investor sentiment across Australia. Use this guide to plan ahead and avoid surprises.
What changes on 20 March 2026
From 20 March, Centrelink deeming rates rise to 1.25% for the lower tier and 3.25% for the upper tier. These rates estimate income on financial assets like bank accounts, term deposits, shares, and managed funds. Higher deemed income can reduce part‑pension amounts for some retirees. Full‑rate pensioners with low financial assets may see no change from deeming, but they still receive the indexation boost.
The Age Pension increase adds about $22.20 a fortnight to eligible recipients, with uplift also flowing to related payments. These March 20 payments aim to help with higher living costs and can support essential spending. Government updates confirm the cash boost for millions of Australians source. The net effect depends on each person’s assets and income, so outcomes will vary across households.
How the new deeming works in practice
Centrelink applies the 1.25% rate up to a lower threshold, then 3.25% above that threshold. These thresholds differ for singles and couples and are reviewed periodically. The result is added to your other assessable income for the income test. The policy change updates expected returns on financial assets source. Check your MyGov or Services Australia account to confirm thresholds that apply to you.
Part‑pensioners with larger financial asset balances are most exposed because higher deemed income can trim fortnightly rates. Retirees with modest savings may see little impact from centrelink deeming rates and will benefit from indexation. Some who were recently eligible could move off the part pension. Others near the cut‑off could drop to a smaller rate. Results depend on updated balances and actual income.
Implications for spending and markets
More cash from the Age Pension increase should lift essential spending among older Australians. Utilities, groceries, and health costs are likely priorities. For investors, any spending bump may be modest and uneven. The deeming rate changes tighten means testing for many, which can offset the uplift. We expect careful budgeting rather than broad discretionary splurges in the first month of March 20 payments.
Higher centrelink deeming rates create an incentive to review where cash is parked. Some may shift from low‑yield accounts to term deposits or income funds if the net return improves after means testing. Others may hold more cash to cover bills and keep stress low. Re‑checking bank rates, fee structures, and liquidity needs can help improve after‑benefit outcomes without adding risk.
Actions to consider before March 20
Log in to MyGov and ensure Centrelink has your latest balances for savings, term deposits, and investments. Report changes promptly. Map your March 20 payments so direct debits and bill cycles are covered. If you expect a lower part pension from higher deemed income, adjust your budget and consider setting aside a two‑to‑three‑month cash buffer for essentials.
Compare deposit and term deposit rates, notice periods, and break fees. If you use income funds or dividends, check distribution timing around March and June. Consider staggering maturities to spread rate risk. Review franking credits, minimum pension drawdowns, and any adviser fee deductions. Small tweaks can help offset centrelink deeming rates while keeping liquidity for medical, insurance, and utility bills.
Final Thoughts
From 20 March, centrelink deeming rates move to 1.25% and 3.25% while the Age Pension increase adds about $22.20 a fortnight. The combined effect is personal. Part‑pensioners with higher financial assets may see lower rates, while retirees with modest savings mostly gain from indexation. To prepare, confirm your balances with Centrelink, update your budget for March 20 payments, and check banking and investment options that fit your risk, income, and liquidity needs. Use online calculators to model outcomes and stress‑test your cash flow. If your situation is complex, speak with a licensed adviser or a free financial information service. A clear plan now reduces surprises later.
FAQs
What are the new Centrelink deeming rates from 20 March 2026?
From 20 March 2026, Centrelink deeming rates rise to two tiers: 1.25% on the lower tier of financial assets and 3.25% on balances above the threshold. Deeming applies to bank accounts, term deposits, shares, and managed funds. Centrelink uses this deemed income in the income test to help set your benefit rate. Thresholds differ for singles and couples and are reviewed periodically by Services Australia.
Will the Age Pension increase offset higher deemed income?
The Age Pension increase of about $22.20 a fortnight provides a baseline boost, but the net effect depends on your assets and income. If higher deemed income reduces your part pension, the indexation uplift may only partly offset the change. Retirees with modest financial assets often see little or no deeming impact and therefore keep most of the indexation increase in their March 20 payments.
How should retirees prepare for the deeming rate changes?
Update balances in your MyGov account so Centrelink calculations are accurate. Review cash needs for the next three months and adjust bill payments if your part pension may fall. Compare deposit and term deposit rates, fees, and access terms. Consider laddering maturities to manage rate risk. Use a pension or benefits calculator to model outcomes. Seek licensed advice if investments, super drawdowns, or tax settings are complex.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.