If you are planning your retirement or already receiving the age pension, the Australia Pension Age Increase 2026 is a change you simply cannot ignore. This shift affects when you can access the pension, how much you might receive, and what rules apply to your financial assets. It is not just about turning a year older, it is about understanding how government policy may reshape your financial reality.
The Australia Pension Age Increase 2026 brings with it more than just a new eligibility age. It connects with broader changes such as updated deeming rates, shifting income thresholds, and revised expectations around retirement income. This article is here to help you understand all of it in plain English. No confusing jargon. Just the facts that impact you, your money, and your future.
Australia Pension Age Increase 2026: What You Need to Know
Starting from January 1, 2026, the age pension eligibility age officially moves to 67 years. This change has been phased in gradually over several years, but now it becomes the standard. If you were born on or after January 1, 1957, you will need to wait until you turn 67 to apply for the age pension.
This is not the only change catching people off guard. From September 2025, the government also increased deeming rates, which directly impacts how Centrelink calculates your pension entitlement. That means even if pension rates increased, your overall payment might not, depending on your financial situation. These two updates together reflect the government’s broader goal of targeting support to those who need it most, but for many Australians, they come with real financial consequences.
Overview Table of Key Changes
| Change | Details |
| Age Pension Eligibility | Increased to 67 years from January 1, 2026 |
| Deeming Rate Update | Effective from September 20, 2025 |
| Lower Deeming Rate | 0.25% on initial thresholds |
| Higher Deeming Rate | 2.25% on balances above threshold |
| Deeming Threshold (Singles) | First $64,200 at lower rate |
| Deeming Threshold (Couples) | First $106,600 combined at lower rate |
| Affected Pensioners | Over 650,000 people impacted |
| Full Pension to Part Pension | Around 180,000 will now receive part pensions |
| Pension Rate Increase | $29.70 per fortnight for singles, $22.40 each for couples |
| Key Risk Group | Savers earning below deemed rates |
What Is Deeming and Why It Matters
Deeming is the government’s way of estimating how much income you earn from your financial assets. Instead of checking what your investments actually bring in, Centrelink applies a fixed rate to calculate your income. These are called deeming rates. They are meant to be fair and simple, but they do not always reflect reality.
If you have savings in a bank or superannuation in pension phase, your actual return might be less than the deemed income. That matters because the deemed income affects whether you get a full or part pension, or none at all. With the September 2025 update to deeming rates, many older Australians are now being assessed as if they are earning more than they actually are. That is why understanding the Australia Pension Age Increase 2026 is not just about age. It is also about income rules that could shrink your pension payment without any change in your actual finances.
Who Benefits from These Changes
Some Australians will come out ahead under the updated rules. People with low or no financial assets, especially those on the full age pension, are likely to benefit most. That is because the increase to base pension rates in September 2025 helps boost income, and these individuals are not hit by the deeming rate adjustments.
Couples with modest assets who are primarily assessed under the assets test rather than the income test may also be unaffected by the change in deeming. The government designed these updates to better target support to people with lower means, so if that describes your situation, the changes might actually work in your favor.
Who Misses Out the Most
The hardest hit are part pensioners with moderate to high financial assets. Many of these individuals are now assessed under the income test using the higher deeming rates, which assume their investments are earning more than they are in reality. This shift pushes some retirees from full pension to part pension, and others from part pension to nothing at all.
Cautious savers with money in term deposits or low-interest savings accounts are especially vulnerable. They have played it safe, but are now penalised for not chasing high-risk returns. For these Australians, the Australia Pension Age Increase 2026 brings not only a delay in access but also a tighter grip on how much support they receive.
Financial Strategy Tips to Reduce Impact
If these updates are likely to affect your payments, here are some things you can do:
- Check your payments through your MyGov account and ensure the calculations align with your actual situation.
- Speak with a financial adviser about options to improve returns on your investments without taking on too much risk.
- Consider how your assets are structured and whether adjustments might help under Centrelink rules.
- Make sure Centrelink has accurate and up-to-date records about your income, assets, and relationship status.
- Take advantage of asset test exemptions like the family home, which is not counted in the pension means test.
Government’s Reason Behind the Change
The government says these changes are about long-term sustainability. The age pension system costs over $50 billion per year and is growing. By increasing the eligibility age and adjusting deeming rates, the aim is to ensure pensions go to those who need them most. Officials argue that since investment returns have generally improved in recent years, deeming rates should reflect that reality.
But critics, including groups like National Seniors Australia, argue that the changes unfairly target those who rely on safe investments. They believe deeming rates should have stayed frozen longer, especially since not all savers are benefiting equally from rising returns. It is a complex balance, and not everyone agrees the government has struck it correctly.
Important Pension Rules Explained
Understanding how the system works can help you protect your income:
- The income test and the assets test are both applied. You are paid based on whichever results in the lower payment.
- Deeming rules apply to financial assets like savings, shares, and superannuation in pension phase.
- The family home is not included in the asset test.
- Deeming applies automatically. There is no way to opt out or avoid it legally.
- Changes in your finances must be reported to Centrelink to avoid penalties or overpayments.
FAQs
When does the pension age change to 67?
The pension age officially increases to 67 on January 1, 2026. This applies to people born on or after January 1, 1957.
What are the new deeming rates?
The lower rate is 0.25 percent, and the higher rate is 2.25 percent, applied to financial assets above set thresholds.
How many people are affected by the deeming changes?
Over 650,000 pensioners will be affected. About 180,000 may shift from full pension to part pension.
Will the pension payment go down for everyone?
No. Many people will still receive more due to the pension rate increase. The effect depends on your assets and income.
Can I avoid being assessed under deeming rules?
No. Deeming rules apply to all pensioners with financial assets. The only option is to adjust your investment strategy with professional advice.
