Pension Increase?

Mark the date in your calendar; 20 March is pension indexation day. This is when your Age Pension payment will be adjusted to account for changes in inflation.

But inflation alone will not be the only factor impacting your payment this year. As NSA has reported previously, pension payments could also change as a result of a rebalancing of deeming rates since a three-year freeze was lifted from July 2025.

Deeming rates are used to estimate how much income your financial assets would earn as part of the income test. They are set to rise because inflation and interest rates are now far above the level of deeming rates.

NSA has argued directly to the Minister for Social Services, Tanya Plibersek, for this change to be introduce slowly, so as not to punish pensioners already struggling with living costs.

Not everyone is impacted by deeming rate changes, because some have savings/assets below a certain level and receive the full pension. Others are not affected by deeming rates because they have more savings/assets, and as such their pension is determined by the assets test.

Confused? Then read on and use our pension indexation estimator to find out if you are impacted.

How much are people impacted?

Based on published CPI figures, NSA has estimated how much your pension might increase from inflation (note: while it is unlikely to affect this estimate, wages data, which is part of indexation, is not due out until 26 February 2026).

The good news is that we estimate the full rate pension will increase by approximately $22.20 per fortnight for a single pensioner and $33.40 per fortnight for a couple combined on 20 March 2026.

This is the maximum it might increase but does not take into account any revaluation of your assets from changes in the value of shares or other investments.

As the graph below shows, this is lower than the indexation in September 2025 but much higher than in March last year. Why? Because indexation is designed to reflect changes in CPI - and that is a good thing as it maintains the relative value of the Age Pension.

Maximum pension indexation changes compared to inflation

Now for the bad news for pensioners under the income test.

With the rebalancing of deeming rates a certainty, the actual amount of change will depend on how much deeming rates increase when indexation is applied.

Our tool allows you to estimate the potential impact of increasing deeming rates by 0% (no change), 0.25%, and 0.5% compared to the current 0.75% rate (applying to financial assets below $64,200 for a single pensioner and $106,200 for a couple) and 2.25% (for assets above the threshold). We assume the increase is applied equally to both rates - in reality the government could increase the lower rate differently to the upper rate.

As you would expect, the higher that deeming rates increase, the less that your pension will increase. Beyond a certain point, your pension payment could in fact reduce.

For example, a single homeowning pensioner with $300,000 of assets outside the principal place of residence would experience an increase in their pension of approximately $11 per fortnight if deeming rates were increased by 0.25% - compared to a $22 per fortnight increase if deeming rates aren't lifted. If deeming rates increased by 0.5%, they would receive small decrease in the pension of $1 per fortnight.

A homeowning couple with $500,000 of assets outside the family home would receive an increase of $16 per fortnight if deeming rates increased by 0.5%, compared to $33 per fortnight with no deeming rate increase. They would receive a decrease of $2 per fortnight if deeming rates increased by 0.5%.

Our hope is that government opts for only a modest 0.25% increase in March to limit the impact on pensioners.

Our estimator cannot show every situation and uses payment data to estimate the impact based on an average.

Everyone will be impacted differently depending on how much assets you have and how much of these assets are deemed (deeming is only applied to financial assets).

Only Centrelink can provide you with the actual impact when they recalculate pensions on 20 March, however our tool can at the least give you a sense of what might happen under different scenarios.

To try our estimator, click here .

To join our Retirement Income and Superannuation campaign to support our work on deeming rates and other policy issues affecting older people, please click here .

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