How March 2026 Deeming Rate Changes Affect Your Centrelink Payments

For millions of Australians relying on Centrelink support, March 2026 marks a significant period of adjustment. Not only will regular indexation lead to increases in many payment rates, but crucial deeming rate changes will also come into effect. These adjustments, set to begin from 20 March 2026, are designed to reflect current economic conditions and ensure the social security system remains fair and sustainable. However, understanding their combined impact is vital for anyone whose Centrelink payments are subject to an income test, particularly Age Pensioners, JobSeeker recipients, and those on Disability Support or Carer Payments. This article will break down what these March 2026 deeming rate changes entail, who will be affected, and what you need to do to understand your specific situation.

Understanding Deeming Rates: A Crucial Component of Centrelink Assessments

Before delving into the specifics of the March 2026 adjustments, it’s essential to grasp the fundamental concept of deeming rates. Deeming is a method used by Services Australia (Centrelink) to estimate the income earned from your financial assets. These assets can include: * Savings accounts * Term deposits * Shares and managed investments * Superannuation (if you've reached Age Pension age) * Loans you've made to others The key principle of deeming is that Centrelink *assumes* your financial assets earn a specific rate of return, regardless of the actual interest or dividends they generate. This system serves several purposes: 1. Fairness: It ensures that all recipients with similar levels of financial assets are treated equally, regardless of their individual investment choices or how actively they manage their funds. 2. Simplicity: It simplifies the assessment process, as Centrelink doesn't need to track every fluctuation in your actual investment returns. 3. Prevents Manipulation: It discourages individuals from structuring their investments in low-return assets to artificially increase their Centrelink entitlements. 4. Reflects Market Conditions: Periodically, deeming rates are updated to align with prevailing interest rates and economic trends, providing a more realistic assessment of potential income. The income deemed from your financial assets is then added to any other income you receive, and this total is used in the income test to determine your eligibility for and the amount of your Centrelink payment.

The March 2026 Deeming Rate Changes in Detail

From 20 March 2026, the federal government will implement new thresholds and rates for deemed income. These adjustments are a direct response to the evolving economic landscape and the general increase in market interest rates. The changes are as follows: * Lower Deeming Rate: This rate will increase to 1.5%. It applies to the first portion of your financial assets: * Up to $60,400 for single individuals. * Up to $100,200 for couples (combined). * Upper Deeming Rate: This rate will rise to 3.25%. It applies to any financial assets held *above* the respective lower thresholds mentioned above. To illustrate, consider a single individual with $70,000 in financial assets. Under the new rates: * The first $60,400 will be deemed to earn 1.5% per annum. * The remaining $9,600 ($70,000 - $60,400) will be deemed to earn 3.25% per annum. This combined calculation determines the total deemed income used in their Centrelink assessment. For a deeper dive into these specific numbers, you can read our detailed breakdown on the New Deeming Rates March 2026: Understanding the 1.5% and 3.25% Impact.

Who Will Be Affected and How?

The deeming rate changes will primarily impact Centrelink recipients whose payments are subject to the income test and who hold financial assets. This includes, but is not limited to: * Age Pensioners: This group is often the most significantly affected, as many retirees hold savings, term deposits, or superannuation (if over Age Pension age) that are assessed under deeming rules. * Disability Support Pension (DSP) Recipients: Those on DSP who have financial assets will also see their deemed income adjusted. * Carer Payment Recipients: Similar to DSP, financial assets contribute to the income test for the Carer Payment. * JobSeeker Payment Recipients: While many JobSeeker recipients may not hold substantial financial assets, those who do will be subject to the new deeming rates. * Parenting Payment Recipients: For single parents or couples receiving this payment, financial asset deeming will apply. * ABSTUDY (age 22 and over) and Commonwealth Rent Assistance: These payments can also be influenced by deemed income from financial assets. It’s crucial to understand that March 2026 will also see the regular twice-yearly indexation of many Centrelink payments to reflect inflation and wage movements. For example, recipients of the full single rate of the Age Pension, Disability Support Pension, or Carer Payment are expected to receive an increase of approximately $22.20 per fortnight. This dual adjustment means that while the deemed income from your assets might increase (potentially reducing your payment), the base rate of your pension or benefit is also likely to rise. For some, the increase in the base payment rate may entirely offset, or even exceed, any reduction caused by the higher deemed income. However, for others, particularly those with higher levels of financial assets, the increased deemed income might lead to a modest reduction in their overall Centrelink payment. Advocacy groups have voiced mixed reactions, with some welcoming the reflection of higher investment returns, while others caution about potential financial pressure on those with modest savings. For more specific insights for retirees, refer to Centrelink Deeming Rate Changes March 2026: What Pensioners Need to Know.

Navigating the Changes: Tips and Practical Advice

The March 2026 deeming rate changes, alongside payment indexation, necessitate a proactive approach to understanding your entitlements. Here are some practical steps and tips:

Don't Panic, Assess Your Situation: The first step is to calmly assess your current financial assets and how they might be impacted. Remember, deeming rates are adjusted to align with current economic conditions, including higher interest rates, which may also mean your actual investments are earning more.
Review Your Financial Assets: Take stock of all your financial assets. While the deeming rates are fixed by Centrelink, understanding where your money is held and its actual performance can help you make informed decisions.
Contact Centrelink Directly: Services Australia is the definitive source for information regarding your specific circumstances. They can provide personalised guidance on how the new deeming rates and payment indexation will affect your entitlements. You can reach them via phone, their website, or your MyGov account.
Utilise Online Calculators: Centrelink often provides online calculators that allow you to estimate your payments based on various scenarios. While these might not immediately reflect the March 2026 rates, they can give you a general idea of how changes in deemed income could affect you.
Consider Professional Financial Advice: If you have complex financial arrangements or are unsure how to manage your assets in light of the changes, consulting a qualified financial advisor specialising in retirement planning and Centrelink entitlements can be invaluable. They can help you understand the full scope of the impact and explore strategies to optimise your financial situation.
Keep Your Information Up-to-Date: Always ensure that Centrelink has your most current financial information. Promptly reporting any changes in your assets or income can prevent overpayments or underpayments.

Why These Changes Are Important Now

The decision to adjust deeming rates in March 2026 reflects a broader government strategy to maintain the fairness and sustainability of Australia's social security system. With the Reserve Bank of Australia (RBA) having raised the cash rate multiple times over the past couple of years, the returns on many financial products, such as term deposits and savings accounts, have also increased. The previous deeming rates, which had remained low for an extended period, no longer accurately reflected this updated economic reality. By aligning deeming rates more closely with prevailing market interest rates, the government aims to ensure that the assumed income from financial assets is a more realistic figure, consistent with current investment opportunities. This move helps balance support for those in need with responsible management of public funds.

Conclusion

The March 2026 deeming rate changes, coupled with the regular indexation of Centrelink payments, represent an important update for millions of Australians. While the primary goal is to ensure the social security system remains fair and responsive to economic conditions, the specific impact on your individual Centrelink payments will depend on your personal financial circumstances, particularly the level of your financial assets. Staying informed, understanding how deeming rates work, and proactively seeking clarification from Centrelink or a financial professional are the best ways to navigate these adjustments and ensure you continue to receive your correct entitlements.