Social Security (Deeming Threshold Rates) Determination 2026

EXPLANATORY STATEMENT

Issued by the authority of the Minister for Social Services

Social Security Act 1991

Purpose

The Social Security (Deeming Threshold Rates) Determination 2026 (the Determination) sets out the below threshold and above threshold rates determined under section 1082 of the Social Security Act 1991 (the Act), for the purpose of calculating income from financial assets under Division 1B of Part 3.10 of the Act.

The effect of the Determination is to determine the below threshold rate as 1.25 per cent, and the above threshold rate as 3.25 per cent.

Background

The Act prescribes rules for calculating income from financial investments, for the purposes of the social security income test. Under these rules, the value of a person’s financial assets is added together and income is deemed on these assets using a ‘below threshold rate’ and an ‘above threshold rate’. These rates are generally known as the ‘deeming rates’.

Deeming is a fundamental part of the social security income test and is used to assess the returns recipients earn on their financial investments. The deeming rates assume that financial investments are earning a certain rate of income, regardless of the amount of income they are actually earning. If a person earns more than these rates, the extra income is not assessed and has no impact on their social security payment.

From 1 July 2025, the first:

$64,200 of a single recipient’s total financial assets;
$106,200 of a pensioner couple’s total combined financial assets; and
$53,100 of each member of a couple’s (other than a pensioner couple), financial assets,

are deemed to earn the below threshold rate, and any financial assets over this amount are deemed to earn the above threshold rate. These thresholds are determined under section 1081 of the Act and indexed by movements in the Consumer Price Index on 1 July each year.

Where available investment returns are low, the deeming rates are set lower to reflect that social security recipients can earn less from their financial investments and therefore should have less income assessed under the income test. Conversely, where available investment returns are high, the deeming rates are generally set higher to reflect that social security recipients’ financial investments can earn higher returns, and as such, more income should be assessed under the income test.

As part of the early economic response to the COVID-19 pandemic in May 2020, the Social Security (Deeming Threshold Rates) Determination 2020 set the below threshold rate as 0.25 per cent and the above threshold rate as 2.25 per cent.

To ease cost of living pressures for pensioners and other income support recipients at a time when inflation had started to rise following the pandemic, the deeming rates were subsequently frozen at these levels until 30 June 2025.

Outside the context of the emergency response to the pandemic and the deeming rate freeze, the deeming rates are subject to continuous review to ensure they reflect the investment returns that pensioners and other income support recipients can reasonably access on their investments. When setting the deeming rates, a wide range of investment indicators are taken into account. These include, but are not limited to:

returns on safe, accessible investments such as transaction accounts, savings accounts, and short-term term deposits;

returns on longer-term investments, such as long-term term deposits;
dividend yields from shares; and
returns on some forms of superannuation (such as account-based).

On 20 August 2025, the Government committed to gradually returning the deeming rates to pre-pandemic settings by aligning them with reasonably available investment returns. The Government announced that changes to the deeming rates will occur at the same time as indexation of social security pensions and benefits, on 20 September and 20 March each year, and increases will be staged to allow time for affected recipients to adjust.

On 20 September 2025, the Social Security (Deeming Threshold Rates) Determination 2025 (the 2025 Determination) set the below threshold rate to 0.75 per cent and the above threshold rate to 2.75 per cent. This was an incremental increase of 50 basis points to each deeming rate that left the deeming rates below the levels of return reasonably available in the economic environment.

The Government also announced the Australian Government Actuary would take on the role of recommending future deeming rates. The Minister for Social Services retains the power to make adjustments, including during exceptional circumstances or events.

In line with this commitment, the Australian Government Actuary recently advised it is appropriate to increase the below threshold rate to 1.25 per cent and the above threshold rate to 3.25 per cent. The Determination enacts this advice and sets the below and above threshold rates to these levels from 20 March 2026.

As a result of the Determination which increases the below and above threshold deeming rates, the social security payment rates of some recipients with financial assets will decrease from 20 March 2026. Deeming impacts a minority of social security recipients. As at the end of December 2025, around 17 per cent of recipients were affected by deeming. For a recipient to be affected by the deeming rates, they must be on an income-tested rate of payment and their total income (deemed income plus any other income) must exceed the income free area for their payment.

The social security deeming rates also apply to the income test for income support payments under the Veterans’ Entitlements Act 1986, and as part of the assessment of a person’s capacity to make co-contributions toward the cost of in‑home and residential aged care under the Aged Care Act 2024.

The 2025 Determination is repealed and replaced by this Determination.

Authority

The Determination is made under section 1082 of the Act.

Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power is construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument. In repealing the 2025 Determination, the Minister is relying on this provision in conjunction with section 1082 of the Act.

The Determination is a legislative instrument for the purposes of the
Legislation Act 2003 and is disallowable.

Commencement

The Determination commences on 20 March 2026.

Consultation

The Department of Social Services consulted the following agencies on the intention to make this Determination:

Services Australia, given the impact on social security payments administered by that agency.
The Department of Veterans’ Affairs, given the social security deeming rates also apply to income support payments under the Veterans’ Entitlements Act 1986.
The Department of Health, Disability and Ageing, given the social security deeming rates are used as part of the assessment of a person’s capacity to make co-contributions for in-home and residential aged care under the Aged Care Act 2024.

These agencies supported the Determination.

Impact Analysis

The Office of Impact Analysis (OIA) advised that an impact analysis is required. Further information is available on the OIA website.

Availability of independent review

A decision made under the social security law, as informed by the Determination, is subject to internal and external review under Parts 4 and 4A of the Social Security (Administration) Act 1999.

Explanation of the provisions

Details of the Social Security (Deeming Threshold Rates) Determination 2026

Section 1 – Name

Section 1 states how the Determination is to be cited, that is, as the Social Security (Deeming Threshold Rates) Determination 2026.

Section 2 - Commencement

Section 2 specifies that the Determination commences on 20 March 2026.

Section 3 – Authority

Section 3 provides that the Determination is made under section 1082 of the Social Security Act 1991.

Section 4 – Schedules

Section 4 provides that each instrument that is specified in a Schedule to the Determination is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to the Determination has effect according to its terms.

Section 5 – Definition

Section 5 contains a definition of a term used in the Determination.

The term ‘Act’ is defined to mean the Social Security Act 1991.

Section 6 – Below Threshold Rate

Section 6 provides that for subsection 1082(1) of the Act, the below threshold rate for Division 1B of Part 3.10 of the Act is 1.25 per cent.

Section 7 – Above Threshold Rate

Section 7 provides that for subsection 1082(2) of the Act, the above threshold rate for Division 1B of Part 3.10 of the Act is 3.25 per cent.

Schedule 1 - Repeals

Item 1 of Schedule 1 repeals the Social Security (Deeming Threshold Rates) Determination 2025.

The Determination is intended to replace the 2025 Determination.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Social Security Act 1991

Social Security (Deeming Threshold Rates) Determination 2026

The Social Security (Deeming Threshold Rates) Determination 2026 (the Determination) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the legislative instrument

The Determination sets out the below threshold and above threshold rates determined by the Minister under section 1082 of the Social Security Act 1991 (the Act), for the purpose of calculating income from financial assets under Division 1B of Part 3.10 of the Act.

The effect of this Determination is to determine the below threshold rate as 1.25 per cent, and the above threshold rate as 3.25 per cent.

Deeming is a fundamental part of the social security income test and is used to assess the returns recipients earn on their financial investments. The deeming rates assume that financial investments are earning a certain rate of income, regardless of the amount of income they are actually earning. If a person’s investments earn more than these rates, the extra income is not assessed and has no impact on their social security payment.

From 1 July 2025, the first:

$64,200 of a single recipient’s total financial assets;
$106,200 of a pensioner couple’s total combined financial assets; and
$53,100 of each member of a couple’s (other than a pensioner couple), financial assets,

As a result of the Determination which increases the below and above threshold deeming rates, the social security payment rates of some recipients with financial assets will decrease from 20 March 2026. Deeming impacts a minority of social security recipients. As at the end of December 2025, around 17 per cent of recipients were affected by deeming. For a recipient to be affected by the deeming rates, they must be on an income‑tested rate of payment and their total income (deemed income plus any other income) must exceed the income free area for their payment.

Human rights implications

The Determination engages the right to social security and the right to an adequate standard of living.

Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) recognises the right to social security and requires a social security scheme to be established under domestic law that provides a minimum essential level of benefits to all individuals and families that will enable them to acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education.

Article 11 of the ICESCR recognises the right to an adequate standard of living, which provides that everyone is entitled to adequate food, clothing and housing and to the continuous improvement of living conditions.

This Determination has been created to ensure fair and equitable means test outcomes for social security recipients who hold financial assets.

The changes to the deeming rates made by the Determination improve the consistency and fairness of social security means testing, and continue restoring the deeming rates to their intended function of reflecting the investment returns reasonably available to social security recipients. When the deeming rates are set disproportionately below the level of investment return reasonably available in the market, recipients with financial assets are treated concessionally compared to those with other sources of income (including employment income for working age recipients). This is inconsistent with the fundamental principle, or objective, of Australia’s targeted social security system, according to which recipients with similar means should get similar income support outcomes.

To the extent that the Determination limits the right to social security and the right to an adequate standard of living by decreasing the rate at which individuals receive social security payments from 20 March 2026, this limitation is legitimate, reasonable, necessary and proportionate.

Deeming rates that reflect the investment returns reasonably available in the economy at a given time help keep the social security system fair by ensuring the income test treats recipients with investment income similarly to those with other forms of income. Disproportionately low deeming rates provide a concession for investment income compared to other forms of income.

Increasing the deeming rates increases the amount of deemed income assessed in the income tested for recipients with financial assets. For example, under the rates set by the Social Security (Deeming Threshold Rates) Determination 2025, a single age pensioner with $100,000 in financial assets is deemed to earn around $56 per fortnight. Under the rates set by the Determination, their deemed income would increase to around $76 per fortnight. If they have no other income or assets, their assessed income would remain under the income free area for a single age pensioner and they would remain on the maximum rate of payment. For their deemed income to be above the income free area – and impact their payment rate – they would need to hold over $213,915 in financial assets.

The two-rate deeming structure ensures all affected recipients can keep a portion of their financial assets in safe and accessible investments, and recognises those with more financial assets have opportunities to see higher returns through a wider range of investment products. For example, a single age pensioner with $100,000 in financial assets would only need to achieve a rate of return of 1.97 per cent per annum to match the deeming rates.

At the end of December 2025, there were around 5.4 million income support recipients. Around 914,000 had their payment rate affected by deemed income. Age pensioners made up around 59 per cent of these recipients. While they make up a majority of recipients affected by deeming, only around 20 per cent of age pensioners are on a rate of payment affected by deemed income.

The rates set by the Determination are reasonably available to social security recipients, as determined by the Australian Government Actuary. Any return a recipient earns on their financial assets above the deeming rates is not assessed in the income test.

By ensuring that income assessed from financial assets held by social security recipients reflects the investment income that can be reasonably achieved by recipients, this Determination enables a simple and fair assessment of financial investment income under the social security means test. This supports the aims of the social security system in appropriately recognising an individuals’ capacity for self-support when determining their rate of income support, improves horizontal equity within the social security system as a whole, and helps ensure the system remains sustainable for future generations.

Deeming is an assessment methodology and, as such, its application does not change the core parameters of the relevant income test, which include the income test free area and taper rates. The free areas and taper rates ensure a person is always financially better off if they have income in addition to their social security payment than if they have no additional income.

Conclusion

This Determination is compatible with human rights as it promotes and supports a person’s right to social security and the right to an adequate standard of living. To the extent that the Determination limits these rights, this is legitimate, reasonable, necessary and proportionate.

The Hon Tanya Plibersek MP

Minister for Social Services

Administered by Department of Social Services

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