Three things changed for the Age Pension on 20 March 2026, and most people only noticed one of them.
The headline was the payment increase. Full Age Pension rates went up by $22.20 a fortnight for singles and $33.40 combined for couples. That bit was easy to spot, and it landed in bank accounts on the first payday after 20 March.
The other two changes were quieter. Both the assets test and income test thresholds shifted, which moved a chunk of borderline retirees into a higher (or in some cases new) entitlement. And the deeming rates went up, which is the assumed rate of return Centrelink applies to your financial assets. For a small number of people, that one bites.
If you’re already on the Age Pension, planning to apply, or sitting near one of the cut-off points, here’s what actually changed, how the two tests work, and where the traps are.
The two tests (and why the worst one always wins)
When you apply for the Age Pension, Centrelink runs your numbers through two separate assessments. The assets test looks at what you own. The income test looks at what you earn. They calculate your entitlement under each, and whichever test produces the lower payment is the one you get. Not the better outcome for you. The lower one.
For most retirees, the assets test is the one that bites. The income test only really matters for people still working, people with large rental income, or people with very large financial asset balances pushing them over the deeming thresholds.
Here are the current numbers, as set by Services Australia from 20 March 2026.
Assets test thresholds (20 March 2026)
For the full pension, your assessable assets must be under:
- Single homeowner: $321,500
- Single non-homeowner: $579,500
- Couple homeowner (combined): $481,500
- Couple non-homeowner (combined): $739,500
For the part pension, your assessable assets must be under the cut-off:
- Single homeowner: $722,000
- Single non-homeowner: $980,000
- Couple homeowner (combined): $1,085,000
- Couple non-homeowner (combined): $1,343,000
Above the full pension threshold, your pension reduces by $3 per fortnight for every $1,000 of assets over the limit. Hit the cut-off and you get nothing.
Income test thresholds (20 March 2026)
For the full pension, your fortnightly income must be under:
- Single: $218
- Couple combined: $380
For the part pension, your fortnightly income must be under the cut-off:
- Single: $2,619.80
- Couple combined: $4,000.80
Above the income free area, the pension reduces by 50 cents for every dollar over the limit (or 25 cents per partner per dollar for couples).
These are the official Services Australia figures and they are indexed twice a year, on 20 March and 20 September. Always check the current numbers at servicesaustralia.gov.au before relying on them, because they move.
What “assets” actually means to Centrelink
The assets test counts almost everything you own except your family home. Cars, boats, caravans, contents, jewellery, collectibles, money in the bank, shares, investment properties, business interests, superannuation in pension phase, the lot.
There’s a difference between insured value and assessable value that catches people out. Centrelink does not care what you’d have to pay to replace your contents if the house burned down. They care what you could get for them in a fire sale, with everything spread on the front lawn for the neighbours to pick over. That’s a much smaller number than your insurance schedule.
We had a client come through with a Game of Thrones collectibles set originally insured for around $100,000. Once the franchise lost momentum, the resale value collapsed. The right number for Centrelink wasn’t the insured replacement value, it was what you could realistically sell it for that weekend, which was a fraction of that.
The same principle applies to your car. Use the lower end of the Red Book range. Use sensible second-hand values for furniture and contents. Don’t try to tell Centrelink your near-new Mercedes is worth $10,000, because they will work that out. But equally, don’t list your insured-for-replacement contents schedule. Be reasonable and defensible. Anything you list should be a number you could justify if asked.
For genuine valuables like serious jewellery, fine art or classic cars, the rule is different. Those need a proper market valuation. Classic cars in particular catch people out because they drop in value, then come back up. If you’ve got a defensible market value, use it.
Investment property traps
Investment properties are assessed at their net value. If a property is worth $1 million and you owe $200,000 on it, the assessable value is $800,000. That part’s simple.
What catches people out is cross-collateralisation. This happens when the bank takes security over both your home and your investment property to write the loan. It’s less common than it used to be, but we still see it. The trap is that if the loan is secured against both properties, Centrelink may not let you deduct the full loan balance from the investment property’s value, because the loan is also secured against your home, which is an exempt asset.
If you’re a few years out from Age Pension age and you have cross-collateralised lending, that’s a conversation worth having with your broker now. Often it can be unwound by having the bank release the security over your home and have the debt secured solely against the investment property, particularly if both properties have grown in value since the loan was written.
The other investment property trap is on the income side. The income Centrelink assesses from a rental property is not the same as the taxable income figure your accountant uses. Centrelink will let you deduct things like agent fees and the interest portion of your loan repayments. They will not let you deduct depreciation, which the tax office does. That means your assessable Centrelink income from the same property can be higher than your taxable income. Not much you can do about it, but worth knowing it’s coming.
Deeming rates: the one that moved in March 2026
The deeming rate is how Centrelink works out the income you’re earning from your financial assets, regardless of what they actually earn. Rather than chase every interest rate and dividend figure across every bank account and super pension, they apply a flat assumed rate and use that as your income for the income test.
From 20 March 2026, the deeming rates are:
- Lower rate: 1.25% on the first $64,200 of financial assets (single) or $106,200 (couple combined)
- Upper rate: 3.25% on anything above those thresholds
That’s a 0.5% increase on both rates from the September 2025 settings. The deeming rates had been frozen since the early COVID period, and only started moving again in September 2025 after the freeze was lifted.
Here’s the thing most people miss: deeming is a free hit if your investments are well managed. If a high-interest savings account is paying you 4.5% and Centrelink is only deeming your money at 3.25%, you keep the extra 1.25% and it doesn’t count as income for the test. The system genuinely rewards getting a decent return on your money. The only way deeming hurts you is if your actual return is below the deemed rate, in which case you’re being assessed on income you’re not earning.
For roughly 90% of pensioners, the deeming rate change won’t move the needle, because they’re assessed under the assets test, not the income test. The deeming rates only matter if the income test is the binding constraint on your pension.
Who does it actually hurt?
- People sitting right on the borderline between asset-tested and income-tested. The deeming jump might be enough to flip them over.
- People close to the Age Pension income cut-off entirely. The jump might be enough to tip them out of the pension altogether, which also costs them the Pensioner Concession Card.
- People who hold the Commonwealth Seniors Health Card. The CSHC has no assets test, only an income test, currently $101,105 a year for singles or $161,768 combined for couples. Deeming on account-based pensions counts toward that. Higher deeming rates can push self-funded retirees over the line and cost them the card.
The CSHC is what we sometimes call the consolation prize. If you’re not eligible for any Age Pension, the CSHC still gets you cheaper PBS medicines, potential bulk-billed GP visits, and various state-based concessions. It’s worth real money over time. Losing it because of a 0.5% deeming jump is the kind of thing that sneaks up on people.
Account-based pensions don’t count as income (mostly)
This is the one that confuses retirees more than anything else.
If you’re drawing an income stream from your super (an account-based pension) of, say, $52,000 a year, that money lands in your bank account every week. It feels like income. It looks like income. Centrelink does not treat it as income.
Instead, they apply the deeming rates to your account balance and use the deemed amount as your income for the test. The actual withdrawal is treated as a return of your capital, like a withdrawal from a savings account, not as fresh income.
This is huge for most retirees. A couple drawing $50,000 a year from a $500,000 combined pension would, on the face of it, be earning $50,000 in income. Under Centrelink’s deeming approach, the same $500,000 balance generates around $14,000 of deemed income (at the current rates), which is well within the couple income test free area. The actual draw-down doesn’t get assessed at all.
There’s one exception. Account-based pensions that were started before 1 January 2015, and where the holder also had the CSHC on 31 December 2014, are grandfathered under the old rules and don’t get deemed. Some annuities and complex income stream products are also treated differently. If you’ve got one of those, get advice because the assessment is different.
A worked example: a typical couple
To make this concrete, let’s run through a fairly common scenario. A couple, both 67, both homeowners, with the following:
- $50,000 in combined car and contents (fire-sale value)
- $5,000 in the bank
- $250,000 each in super, drawing an account-based pension
Assets test calculation:
Total assessable assets are $555,000. The couple homeowner full pension threshold is $481,500, so they’re $73,500 over.
Pension reduction = $73,500 / $1,000 × $3 = $220.50 per fortnight.
Maximum pension is $1,810.40 per fortnight, so under the assets test they would receive around $1,590 per fortnight combined.
Income test calculation:
Their financial assets total $505,000 (the $500K in super pension plus $5K in cash). Deemed income is roughly:
- First $106,200 at 1.25% = $1,328 per year
- Remaining $398,800 at 3.25% = $12,961 per year
- Total deemed income = around $14,289 per year, or $549 per fortnight
That’s $169 over the couple income free area of $380. Pension reduction = $169 × $0.50 = $84.50 per fortnight. So under the income test they would receive around $1,726 per fortnight combined.
The result: Centrelink applies whichever test gives the lower payment. The assets test gives the lower number, so this couple receives around $1,590 per fortnight. Their assessment is asset-tested and the deeming rate change in March 2026 does not affect their pension at all.
This is why we say most retirees don’t need to lose sleep over deeming. Unless your assessment is being driven by the income test, the deeming rate is mostly background noise.
Please note: All figures, projections and scenarios in this article are approximate and for illustrative purposes only. Individual outcomes will vary based on personal circumstances, investment returns, fees, and current government policy. This is general information, not personal advice.
Gifting: why “just give it to the kids” doesn’t work
The most common workaround people try is gifting money to family before applying for the pension. The thinking is simple: reduce my assets, qualify for more pension. Centrelink has thought of that.
The gifting rules let you give away $10,000 in any single financial year, with a five-year rolling cap of $30,000. Anything you give above those limits is treated as a “deprived asset” and counted as if you still own it for five years from the date of the gift.
So if a couple gives $50,000 each to two adult children (a $100,000 gift), $30,000 of it would fall within the allowable limit (assuming nothing else has been given recently). The other $70,000 is treated as a deprived asset. Centrelink still counts it against you, and it still earns deemed income for the income test, for five years.
There’s also a five-year look-back when you apply. Gifts made within five years of your application get assessed under the gifting rules. Gifts made more than five years before your application don’t.
The takeaway: if you genuinely want to help the kids with a deposit or a big-ticket purchase, doing it well before you’re within reach of the Age Pension is much cleaner. Doing it in the two or three years before you apply just transfers your assets on paper without transferring them in Centrelink’s eyes.
The 24-month home sale exemption
If you sell the family home and intend to use the money to buy another home to live in, the proceeds are exempt from the assets test for up to 24 months. That gives you breathing room to find your next place without losing your pension overnight.
But it’s only an asset test exemption. The cash sitting in your bank account is still subject to the income test through deeming, at the lower deeming rate of 1.25%. For most asset-tested pensioners this still works out fine. For someone close to the income test threshold, a large sum sitting in cash during the transition could still tip them over.
What to actually do about it
The 20 March 2026 changes are mostly positive for retirees. Higher payment rates. Higher thresholds, so more people qualify for at least a part pension. The deeming rise is real but only affects a small subset.
A few things worth doing if any of this is relevant to you:
- Check your asset values. Most people overstate their contents value because they’re thinking insurance, not fire sale. Recalculating to defensible market values often frees up a couple of thousand dollars of pension a year.
- Look at how your investment property loan is structured. Cross-collateralisation is the silent trap. Worth a conversation with your broker if you’re within five years of pension age.
- Don’t gift large sums within five years of applying. It won’t help, and it might actively reduce your flexibility.
- Make sure your super is invested properly. If your money’s deemed at 3.25% but your fund is earning 6 or 7%, you’re winning. If your fund is earning 2% in cash, you’re being assessed on income you don’t have.
If you’re not sure how the current rules apply to your specific situation, the Wealthlab retirement quiz gives you a quick general snapshot. For deeper questions, book a free chat with the team. No jargon, no sales pitch, just a conversation about where you stand.
For more on how the Age Pension interacts with super and CGT planning before retirement, our podcast episode How the Age Pension Really Works (With Real Case Studies) walks through a worked example where the timing of selling an investment property dropped one client’s CGT bill from $98,000 to $11,000 by combining the retirement-year timing with catch-up contributions. Worth a listen if that’s the kind of decision in front of you.
Frequently asked questions
What changed for the Age Pension on 20 March 2026? Three things. Maximum pension rates increased by $22.20 a fortnight for singles and $33.40 combined for couples. The assets and income test thresholds moved up, letting more people qualify for at least a part pension. And deeming rates rose by 0.5% on both the lower and upper rates, to 1.25% and 3.25% respectively.
What’s the difference between the assets test and the income test? The assets test looks at the total value of what you own (excluding your family home). The income test looks at what you earn, including deemed income from financial assets. Centrelink runs both and applies whichever gives you the lower pension. For most retirees, the assets test is the one that decides their payment.
Does my super count toward the Age Pension assets test? Yes, once you’re at Age Pension age (currently 67), your full superannuation balance counts as an assessable asset. This is true whether the money is in accumulation or pension phase. The exemption only applies before you reach pension age.
How much can I gift without losing my pension? You can gift up to $10,000 in a single financial year, with a five-year rolling cap of $30,000. Anything above those limits is treated as if you still own it for five years and is counted in both the assets test and the income test (through deeming).
Why is the income from my account-based pension not counted as income? Because Centrelink treats it as a return of your own capital, not new income. Instead of counting the actual withdrawal, they apply the deeming rates to your account balance and use the deemed amount as your income for the test. The exception is older account-based pensions started before 1 January 2015 and grandfathered for CSHC holders, which are assessed differently.
Can the deeming rate change cost me the Commonwealth Seniors Health Card? It can, if you’re close to the income threshold. The CSHC income test combines your adjusted taxable income with deemed income from account-based pensions. Higher deeming rates lift the deemed income figure, even if your actual returns haven’t changed. For self-funded retirees near the $101,105 (single) or $161,768 (couple combined) threshold, the change is worth recalculating.
I’m under Age Pension age but my partner isn’t. Does my income still count? Yes. Centrelink assesses you as a couple, so both partners’ income and assets are combined for the test, even if only one of you has reached Age Pension age. The eligible partner’s payment is based on the couple rate but only receives their half.
How often do these numbers change? Twice a year. Age Pension rates, asset thresholds and income thresholds are indexed on 20 March and 20 September each year. Deeming rates are reviewed separately by the Australian Government Actuary and adjusted by the Minister for Social Services. Always check the Services Australia website for the current figures before relying on them.
Talk it through
Centrelink’s rules are full of nuance, and the wrong assumption in the wrong spot can cost you thousands a year in entitlements you didn’t know you were eligible for, or a card you didn’t realise you were about to lose. If you’d like to talk through how the 20 March 2026 changes affect your situation, or work out where you sit against the current thresholds, book a free chat with the Wealthlab team. No cost, no pressure, just a conversation.
