What is the Deeming Rate?

How it works

Rather than tracking what every account actually earns, Centrelink applies a fixed formula to your total financial assets to produce a "deemed" income, which then feeds into the income test regardless of your real returns. There are two rates split at a threshold: a lower rate on assets up to the threshold, and a higher rate on anything above it. It applies to bank accounts, term deposits, shares, managed funds, and super in accumulation phase once you reach Age Pension age. It doesn't apply to your home, investment properties (rental income is assessed separately), or physical assets like cars and furniture.

Current rates and thresholds

As of the current 2026 rates, the lower deeming rate is 1.25%, applied to the first $66,800 of a single person's financial assets or $110,600 for a couple combined, with 3.25% applied above that. These rates are set by the Minister for Social Services on the recommendation of the Australian Government Actuary, and reviewed at least every six months, so check Services Australia for the exact current figures before relying on them.

Worked example

Margaret is single with $180,000 in financial assets. The first $66,800 is deemed at 1.25%, $835 a year. The remaining $113,200 is deemed at 3.25%, $3,679 a year. Total deemed income: $4,514 a year, around $173.60 a fortnight, and that's what Centrelink counts toward her income test, regardless of what her accounts actually earned.

Why it matters

Deemed income is added to any other assessable income and compared against the income test free area. Every dollar of assessed income above that free area reduces the pension. So even if your real returns are lower than the deeming rate suggests, the deemed amount is still what counts, and if your returns are higher, you're only assessed at the deeming rate either way. Our Retirement Income & Age Pension Calculator factors deeming in automatically when it estimates your pension.