In light of the impact of rising inflation in Australia, the government periodically adjusts its social assistance schemes. As part of this process, the government implements an “indexation” procedure twice a year—in March and September—under which payments received through Centrelink are increased to ensure that beneficiaries’ purchasing power is maintained.

Effective March 20, 2026, several key Centrelink payments have once again been increased. However, alongside this, “deeming rates” have also been raised, which could potentially impact pensions and other benefits. Therefore, it is crucial to understand whether these changes will be beneficial for you or if they might have any negative implications.

Which Centrelink Payments Have Increased?

According to government information, the payment amounts provided under several major schemes have been increased effective March 20, 2026.

Individuals receiving the full single rate of the Age Pension, Disability Support Pension, or Carer Payment will now receive an additional amount of approximately $22.20 every fortnight.

Additionally, increases have been applied to the following schemes:

• Commonwealth Rent Assistance
• JobSeeker Payment
• ABSTUDY (for those aged 22 and over)
• Parenting Payment

This change is expected to directly benefit over 5 million people, including more than 2.5 million age pension recipients.

While this increase may appear modest, this rise in regular payments provides significant relief over time.

What is indexation, and why is it important?

Indexation is a process through which the government adjusts the value of social benefits in line with inflation.

When inflation rises, the cost of living also increases. In such a scenario, if pension or assistance amounts were to remain static, people’s real income would effectively decrease. To address this issue, the government periodically increases these payments.

The objective is to ensure that beneficiaries can meet their daily needs without facing undue financial pressure.

What are deeming rates, and what is their significance?

In Australia, the calculation of the Age Pension is based not only on your income but also on your assets.

“Deeming rates” are a mechanism through which the government assumes that your assets are generating income at a specific rate—regardless of whether the actual income generated is lower or higher than that rate.

This rate applies to the following assets:

• Bank savings and fixed deposits
• Investment funds
• Shares and securities
• Loans and other financial investments

The advantage of this system is that pension calculations remain simple and stable, and it also encourages people to invest.

What changes have occurred in deeming rates in 2026?

Deeming rates were kept stable during the COVID-19 pandemic, but they are now being gradually increased.

As of March 20, 2026, the new rates are as follows:

• 1.25% on the first $64,200 (previously 0.75%)
• 3.25% on amounts exceeding this threshold (previously 2.75%)

This means that the “deemed income” from your assets will now be considered higher, which could impact your pension.

Could this change result in a lower pension?

Yes, in some cases, this is possible.

If you hold significant financial assets, the increased deeming rates will result in a higher deemed income. This could lead to a reduction in your age pension or other benefits.

However, the fortnightly payments increased by the government may offset this impact to some extent.

Therefore, the impact of these changes may vary for each individual, depending on their specific income and asset situation.

What should beneficiaries do?

In light of these changes, it is essential that you accurately assess your financial situation.

You should take the following steps:

• Contact Centrelink to enquire about your current status.
• Seek advice from a financial advisor.
• Maintain up-to-date records of your income and assets.

This will help you understand how the new rules will affect you personally.

Conclusion: Both Relief and Caution Are Essential

The increase in Centrelink payments in 2026 has undoubtedly brought relief to millions of people. However, the accompanying rise in deeming rates is an aspect that cannot be overlooked.

On one hand, you are receiving additional funds; on the other, the calculation of your pension is also changing. Therefore, it is crucial that you formulate your financial plan with a clear understanding of both these aspects.

Accurate information and timely action can help you fully capitalise on these changes and safeguard you against any financial difficulties in the future.

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