The changes that will take effect from March 2026 are part of a scheduled review and updated assessments of income and assets for Australians receiving the Age Pension. The system is means-tested, which means payments are adjusted depending on income, assets, and other circumstances. For some seniors, these updated assessments are enough to push them over the income or asset threshold, causing a reduction or complete cancellation of their payments.
- Scheduled Reviews: Services Australia will conduct regular income and asset reviews.
- Updated Asset Values: This includes bank balances, investments, and other assets.
- Adjustments Following Indexation Changes: Payments will be adjusted according to the latest indexation updates.
- Deeming of Income: The government will scrutinize deeming income more closely, which affects how certain savings or investments are treated for pension eligibility.
Why the $1,178 Figure Is Important
For a single person, the maximum Age Pension payment is approximately $1,178 per fortnight, which includes both the base pension and supplements. For couples, the combined amount is higher, but the same rules apply for reductions or cancellations once their income or assets exceed certain limits.
When a retiree’s income or assets surpass the set threshold, their pension will initially be reduced gradually. If the balance continues to rise, the pension may be significantly lowered or stopped completely. The sudden nature of this change has left many seniors scrambling to understand how the policy will affect them.
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Who Is Most at Risk of Losing Their Payments?
- Seniors with Modest Savings: Those who have saved carefully over the years are now finding that even moderate savings—whether in bank balances, term deposits, or managed funds—are enough to push them over the asset limit.
- Homeowners Who Downsized: Many seniors who sold larger homes and moved to smaller properties to free up cash are now discovering that their extra savings count against them when it comes to pension eligibility.
- Self-Funded Retirees Near the Cut-Off: Retirees who are already receiving a part pension are also at risk. A small change in investment returns or interest rates could push them over the asset threshold and result in a reduction or cancellation of their payments.
- Seniors Who Didn’t Report Changes Promptly: Failing to update Centrelink about changes such as gifts to family members, withdrawals from superannuation, or increases in bank balances can trigger reassessments and backdated reductions.
Understanding Deeming and Its Impact
One of the most confusing aspects of the Age Pension system is the deeming process. This system assumes a fixed income from your savings regardless of what they actually earn. The government counts this deemed income as part of your total income when determining your pension eligibility. The deeming rules apply to most financial investments including bank accounts and shares. The system uses two rates to calculate your deemed income. A lower rate applies to the first portion of your financial assets and a higher rate applies to amounts above that threshold. This approach creates problems for many retirees. If your actual investment returns fall below the deemed rates the government still treats you as earning the higher amount. This reduces your pension payment even though you received less income in reality. The deeming thresholds & rates change periodically based on economic conditions. However these adjustments often lag behind actual market interest rates. During periods of low interest rates this gap becomes particularly problematic for pensioners who rely on conservative investments like term deposits. Understanding how deeming affects your pension requires careful calculation. You need to know your total financial assets and which deeming rate applies to different portions. The deemed income then combines with your other income sources to determine your final pension amount under the income test. Many retirees find themselves caught between wanting safe investments & facing pension reductions through deeming. The system essentially penalizes conservative investment strategies during low rate environments. This forces difficult decisions about risk and return in retirement planning.
For example if your savings are assumed to generate a specific income & that figure increases your pension might be cut even when your real income stays the same. This system creates particular difficulties for retirees who own valuable assets but receive little actual income.
What the Government Is Saying
The government agency Services Australia responded to the rising worries by saying these updates are just routine administrative work and not a new set of rules. Officials stated they want to make sure pension payments stay correct and fair by accounting for any changes in what people earn or own.
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Critics say the current thresholds have not kept pace with the rising cost of living. Inflation keeps climbing and interest rates continue to go up. Living expenses are getting more expensive every year. As a result more seniors are being pushed above the asset and income limits. When this happens their pension payments get reduced. The problem is that these limits were set years ago and have not been adjusted enough to reflect today’s economic reality. Seniors who have saved modest amounts for retirement are now finding themselves penalized. Their savings and income levels that would have been considered reasonable in the past now disqualify them from receiving full pension benefits. This creates a difficult situation for retirees who planned carefully but are now caught between rising expenses and reduced government support. Many seniors are watching their purchasing power decline as their pensions get cut while their costs keep increasing.
Real Stories Behind the Numbers
Many seniors are experiencing the impact of these changes firsthand. Peter and June are both 72 years old and live in regional Victoria. Their part pension disappeared entirely because of their savings. They now have to reduce spending on basic necessities. Peter explained that they are not wealthy people but the government paperwork suggests otherwise. The savings they accumulated through decades of employment exceeded the asset limit. This resulted in their fortnightly payments being reduced to nothing.
Margaret is 69 years old & lives in Adelaide. Her pension got smaller but did not stop completely. She said that her pension is still there but she has less money to spend now. Every time she buys groceries it feels more expensive than before.
What You Can Do If Your Pension Is Affected
- Check Your Centrelink Letter Carefully: If you notice a change in your pension, read the letter from Centrelink carefully. This will explain the reason for the change.
- Review Your Income and Assets: Make sure your details on record with Centrelink are accurate. If there have been any changes in your income or assets, update them promptly.
- Seek Professional Advice: Consider speaking with a financial advisor who can help you understand how the changes affect you and whether any adjustments to your savings or superannuation might help.
- Understand Your Eligibility for a Part Pension: If you’re close to the asset threshold, you may still be eligible for a reduced pension. Make sure you explore all options before taking drastic steps like withdrawing large sums from your superannuation.
Key Takeaways
- Pension Reductions Are Happening Now: Thousands of seniors are facing reductions or cancellations of their Age Pension payments starting in March 2026 due to asset and income reviews.
- Downsizing and Savings Matter: Seniors who downsized their homes or saved modestly are at risk of losing their payments, especially if their assets push them over the limit.
- Deeming and Asset Valuation Are Crucial: Understanding how deeming works and keeping your asset valuation up to date is key to avoiding surprises.
- Seek Advice and Plan Ahead: Don’t wait until your payment is reduced. Regularly review your assets and seek professional advice to ensure your retirement plans stay on track.
