CANBERRA, Feb 20, 2026, 20:22 (AEDT)
- On March 20, over 5 million people on welfare will see their payments jump, thanks to indexation adjustments.
- The government is set to hike deeming rates—used for calculating income from financial assets—a move that could cut certain entitlements.
- COTA, the advocacy group for older Australians, threw its support behind a gradual transition, cautioning that some pensioners simply can’t pursue higher returns.
Starting March 20, Australia will increase several Centrelink payments as part of its regular inflation adjustments, the government announced Friday, marking a small gain for millions of households.
It’s also hiking “deeming rates,” the benchmark for figuring income from savings and other financial assets. That technical move means some pensioners and welfare recipients could see their payments trimmed.
Cost-of-living stress isn’t easing, and policymakers are doubling down on means testing to target relief. That shift in deeming rules? It can hit entitlements, regardless of whether a person’s real income budges.
Social Services Minister Tanya Plibersek says that from March 20, more than 5 million people—including upwards of 2.5 million Age Pensioners—will see their fortnightly payments go up. Those on the full single rate of the Age Pension, Disability Support Pension, or Carer Payment are set to get an extra A$22.20 each fortnight, according to Plibersek. “To make sure our social security system delivers value for taxpayers it must be grounded in fairness,” she said. (Department of Social Services Ministers)
The minister’s office said the changes extend to Commonwealth Rent Assistance, JobSeeker, ABSTUDY for those 22 and older, and Parenting Payment. Final indexation numbers will be set once the latest inflation data is confirmed, according to the office.
From March 20, deeming rates will shift following a recommendation from the Australian Government Actuary that the government has signed off on, according to 9News. Singles with financial assets below A$64,200 and couples under A$106,200 will see the lower deeming rate climb 0.5 points, landing at 1.25%. Anything above those cutoffs gets hit with a 3.25% upper rate. (9News)
Deeming works as a shortcut in the income test. Instead of following what someone actually makes on their savings, the system picks a fixed rate of return and runs with it. If that assumed rate climbs, it can nudge a person right up to the income limits—or even over—cutting into their payment.
COTA Australia described the pension boost as a relief for many, but cautioned that changes to deeming rates might have mixed effects. “Any increase in the Age Pension is welcome,” said COTA chief executive Patricia Sparrow. She noted that “a measured ‘step up’ reduces the risk” of abrupt payment changes. Sparrow also highlighted concerns for retirees lacking digital skills, saying some may not be able to use higher-yielding online accounts relied on by the Actuary’s calculations. (COTA Australia)
Savings.com.au pointed out that the revised deeming rates remain lower than a lot of savings and term deposit offers, many of which hover in the mid-to-high 4% band, with a few going even further. That spread is central to the government’s case: it argues the fresh deeming thresholds are realistic and don’t ask savers to chase excessive risk. (Savings.com.au)
The outcome isn’t going to look the same for everyone. For some, higher indexation could be eaten up by a reduced entitlement as higher deeming rates kick in. And those final payment tables — with the new income and asset limits — still haven’t been released.
