CANBERRA, 20 February 2026 – Australian retirees are preparing for a significant shift in their fortnightly income as the Federal Government confirms a dual update to Centrelink pension payments scheduled for next month. While the standard March indexation is expected to provide a moderate boost to base rates, a simultaneous increase in deeming rates marks the end of a long-term freeze, potentially affecting the total take-home amount for self-funded and part-pensioners.
Deeming Rate Increase Confirmed for March 2026
In a major policy shift, the Government has confirmed that deeming rates—the assumed rates of return on financial assets used to determine pension eligibility—will rise by 0.5 percentage points effective 20 March 2026. This move follows a multi-year freeze designed to protect retirees during periods of high inflation.
The new deeming rates will be updated as follows:
- Lower Rate: Increases to 1.25% for financial assets under $64,200 (singles) and $106,200 (couples combined).
- Upper Rate: Increases to 3.25% for assets above these thresholds.
While the increase reflects a “fiscally responsible” adjustment to current market conditions, some welfare recipients may face payment cuts if their deemed income now exceeds previous thresholds. However, for many, these adjustments will be offset by the concurrent indexation of the base pension rate.
Eligibility and Asset Thresholds
To qualify for the Age Pension in 2026, applicants must meet specific age, residency, and financial criteria. The current qualifying age remains steady at 67 years. Residency rules generally require a claimant to have been an Australian resident for at least 10 years in total, with at least five of those years being continuous.
The following table outlines the core requirements and limits currently in place for the Age Pension:
| Category | Requirement / Limit Details |
|---|---|
| Qualifying Age | 67 years or older |
| Residency | Australian resident for 10 years (5 years continuous) |
| Gifting Limit | $10,000 per financial year (max $30,000 over 5 years) |
| 2025 Max Payment (Single) | Approx. $28,000 per annum (subject to March 2026 indexation) |
| 2025 Max Payment (Couple) | Approx. $42,000 per annum (subject to March 2026 indexation) |
Upcoming Payment Recalculations
A mass recalculation of payments is currently underway. Most pensioners are expected to see either no change or minor adjustments of less than $50 per fortnight. However, retirees are encouraged to check their MyGov accounts in early March, as some may experience “deposit date shakes-ups” due to calendar adjustments in the 2026 payment cycle.
Additionally, a “Pension Backpay Alert” has been issued for those affected by policy updates in late 2025. Thousands of Australians may be eligible for backpaid funds due to previous errors in indexation applications or deeming rate calculations.
Frequently Asked Questions
When will the next pension increase happen?
The next scheduled indexation increase for the Age Pension will take effect on 20 March 2026. This review is based on economic data and the Consumer Price Index (CPI) from the previous six months.
How do the new deeming rates affect my payment?
If you have significant financial investments, Centrelink will assume those assets are earning more income starting 20 March 2026 (up to 3.25%). If this “deemed income” increases, your fortnightly pension payment may decrease slightly, depending on where you sit within the income test brackets.
Can I still gift money to family without losing my pension?
Yes, but strict limits apply. You can gift up to $10,000 in a single financial year, or a total of $30,000 over a rolling five-year period. Any amount gifted above these limits will still be counted as an asset under the assets test for five years from the date of the gift.
What is the lifetime cap on aged care contributions?
As of late 2025, a lifetime cap of $135,318.69 is in place for participant contributions toward “Support at Home” services. This is designed to protect those who require long-term aged care from unlimited costs.