Keith has $250,000 sitting in a term deposit earning 4%. Bev has the same amount in an everyday savings account earning almost nothing. Both are single and on the Age Pension. Which of them does Centrelink say earns more income?
Neither. Centrelink treats them exactly the same, because it doesn’t look at what their money actually earns. It uses deeming, a set of assumed rates, to decide what their savings “should” be earning. Keith gets to keep his extra interest without it touching his pension. Bev is assessed on income she isn’t getting. That’s deeming in a nutshell.
What deeming is
According to Services Australia, deeming assumes your financial assets earn a set rate of income, no matter what they really earn. That deemed income is added to your other income, and the total goes through the income test for the Age Pension and other payments.
The government’s reasoning is that it keeps payments steady rather than bouncing around with markets, and it rewards people who earn more than the deemed rate, because the extra doesn’t count.
Current deeming rates and thresholds
Deeming rates were frozen at very low levels for several years after COVID. That freeze ended in 2025, and the rates have been rising in steps since, most recently on 20 September 2026. According to the Department of Veterans’ Affairs rate tables, the low rate went from 1.25% to 1.75% and the high rate from 3.25% to 3.75% on 20 September 2026. The thresholds were set from 1 July 2026 and didn’t change in September.
| Your situation | Deemed at 1.75% | Deemed at 3.75% |
|---|---|---|
| Single | First $66,800 | Anything over $66,800 |
| Couple, at least one gets a pension | First $110,600 combined | Anything over $110,600 |
| Couple, neither gets a pension | First $55,300 each | Anything over $55,300 each |
These rates apply from 20 September 2026. The Minister for Social Services sets the rates, and they can change at any time, so check the Services Australia deeming page linked above for the current figures.
What gets deemed
Deeming applies to financial assets. Services Australia lists the main types as:
- savings accounts and term deposits
- managed investments, loans and debentures
- listed shares and securities
- some income streams, including most account-based pensions
- some gifts you make.
Things that aren’t deemed include your home, cars, household contents and investment property. Rent from an investment property is assessed on what you actually receive, not deemed. Your home is also exempt from the assets test, which we cover in our piece on the Age Pension assets test and the family home.
A few special cases are worth knowing:
- Home sale proceeds. If you sell your home and intend to use the money to buy, build or renovate another one, the proceeds set aside for that are deemed at the lower rate only. This applies to home sales from 1 January 2023.
- Home Equity Access Scheme payments. Advance payments are subject to deeming. See our guide to the Home Equity Access Scheme.
- Failed investments. You can apply for a deeming exemption if an investment has failed and you can’t get your money back, but not just because an investment performed poorly.
Account-based pensions
If you’ve moved your super into an account-based pension, the balance is treated as a financial asset and deemed like your bank savings. The payments you draw don’t count as income themselves. Only the deemed amount does.
There’s an important older exception. According to Services Australia’s guide to income streams, an account-based pension is assessed the old way (gross payments less a deduction amount, rather than deeming) if both of these apply:
- you started it before 1 January 2015, and
- you’ve been on a pension or allowance without a break since 31 December 2014.
Lose either condition, for example by rolling the pension into a new product or going off the pension for a while, and deeming applies from then on. If you have one of these older pensions, talk to Centrelink before you change anything. The grandfathered treatment is often more generous and you can’t get it back.
Deeming of account-based pensions also matters for the Commonwealth Seniors Health Card, which uses deemed income from these pensions in its income test.
Worked examples
Centrelink works in fortnights, so we’ve divided the annual deemed income by 26. These use the rates from 20 September 2026 and the income test free areas published by Services Australia in October 2026 ($226 a fortnight for singles, $396 combined for couples).
| Who | Financial assets | Deemed income per year | Per fortnight |
|---|---|---|---|
| Single | $50,000 | $875 | $33.65 |
| Single | $100,000 | $2,414 | $92.85 |
| Single | $250,000 | $8,039 | $309.19 |
| Couple (on pension) | $400,000 combined | $12,788 | $491.85 |
Keith and Bev, single, $250,000 each
The first $66,800 is deemed at 1.75%, or $1,169. The other $183,200 is deemed at 3.75%, or $6,870. That makes $8,039 a year, or $309.19 a fortnight. With no other income, that’s $83.19 over the $226 free area, so the pension is reduced by about $41.60 a fortnight under the income test. (Whichever of the income and assets tests gives the lower pension is the one that applies.)
Keith’s term deposit actually pays $10,000 a year, but only the $8,039 counts. Bev’s account pays almost nothing, but she’s still assessed on $8,039.
A couple with $400,000
The first $110,600 at 1.75% is $1,935.50. The remaining $289,400 at 3.75% is $10,852.50. Total: $12,788 a year, or $491.85 a fortnight. That’s $95.85 over the $396 couple free area, so each partner’s pension drops by about $23.96 a fortnight under the income test.
What the September 2026 rise cost
Under the old rates of 1.25% and 3.25%, the same $250,000 was deemed to earn $6,789 a year. The 0.5 percentage point rise adds $1,250 a year of deemed income. For a single pensioner affected by the income test, that’s roughly $24 a fortnight less pension, partly offset by the September pension indexation.
What you can do about it
Deeming isn’t something to fight, but it is something to plan around:
- Don’t leave big sums earning nothing. If you’re deemed to earn 3.75% anyway, letting cash sit in a 0% account is the worst of both worlds.
- Know your exempt assets. Money spent on your home or genuine home improvements isn’t deemed, but don’t make big decisions purely to chase a pension.
- Check before rolling over an old account-based pension. You may lose grandfathered treatment.
- Update Centrelink when your balances change, so you’re paid correctly and avoid a debt later.
Moneysmart has a clear overview of how the Age Pension and other government benefits fit together, and Centrelink’s free Financial Information Service can run through your own numbers.
FAQ
What are the deeming rates right now?
From 20 September 2026, 1.75% applies to the first $66,800 of financial assets for a single person (or $110,600 combined for a pensioner couple) and 3.75% to anything above that. Check Services Australia for the latest rates.
Is my account-based pension deemed?
Usually yes. It’s only assessed under the older rules if you started it before 1 January 2015 and have received a pension or allowance without a break since 31 December 2014.
Does my house get deemed?
No. Your principal home isn’t a financial asset. Money from selling it may be deemed, though proceeds you intend to put towards a new home are deemed at the lower rate only.
If my savings earn more than the deeming rate, do I lose pension?
No. Anything you earn above the deemed amount doesn’t count as income for the income test.
Why did my pension drop in September 2026?
The deeming rates rose by half a percentage point from 20 September 2026. If your pension is set by the income test and you have significant savings, the higher deemed income may have reduced your payment.
This article is general information only and isn’t financial advice. Rates, thresholds and rules change regularly, so check your own situation with Services Australia (or a Financial Information Service officer) before making decisions.
