As 2026 approaches, superannuation and social security in Australia is going through significant changes. For many people retiring soon, new rules are coming about how and when you access your retirement savings. Superannuation are meant to help you be financially independent, but how you access those funds can greatly affect your access to Government support. With changes coming regarding deeming rates, asset thresholds, and contribution caps, it is becoming more important to manage the super balance and Centrelink relationship. Poor planning when accessing your wealth can also result in having your Age Pension or other critical supplements reduced.
Changes to Pension Income Tests and the Effect of Rising Deeming Rates
The most notable change happening in early 2026 is the deeming rate change. After a long time of deeming rate stability, the Australian Government has changed the rates for calculating the ‘assumed’ income from your financial assets (including superannuation in the pension phase). Deeming is a system used by Centrelink to estimate what your investments are earning, regardless of how they are actually performing in the market. As the rates increase, so does the income Centrelink ‘assumes’ you are earning from your super account-based pension. If the ‘assumed’ income exceeds the set thresholds, it will contribute to a direct, dollar for dollar deduction of your pension payment every fortnight. These changes are frustrating for most people because, despite their actual bank balance remaining unchanged, the government support they receive drops because the ‘assumed’ income on their super has been adjusted to mirror the prevailing higher interest rate.
The Assets Test and Strategic Withdrawals
How you choose to withdraw your super—including by stream or lump sum—dictates how Centrelink views your net worth. For Age Pension age clients, money in a superannuation accumulation account is no longer exempt from the assets test. However, if you are younger than the pension age (currently 67), there can be instances where keeping funds in the accumulation phase is a strategy to push a partner’s pension higher. However, once you change those funds to retirement phase or take a lump sum, and then that money is put in a bank account, it becomes a “countable asset.” In 2026, the thresholds for those assets are being indexed, but the “taper rate” is still very sharp: for every $1,000 you own over the limit, your pension can be cut by $3 every fortnight.
2026 Rates and Key Thresholds
The following table summarizes the confirmed and projected changes for the 2026 financial year. These changes set the limits that determine how much your super withdrawal will impact your Centrelink benefits.
| Category | 2026 Rate / Threshold | Impact on Centrelink |
| Lower Deeming Rate | 1.25% | Applies to first $64,200 (Single) / $106,200 (Couple) |
| Upper Deeming Rate | 3.25% | Applies to assets above the lower threshold |
| Transfer Balance Cap | $2.1 Million | Limits tax-free super-to-pension transfers |
| Asset Test Taper | $3.00 per $1,000 | Fortnightly pension reduction for excess assets |
| Concessional Cap | $32,500 | Limit on pre-tax super contributions |
Changes with Payday Super
A big change coming on July 1, 2026, is called \”Payday Super.\” It forces that superannuation contributions be paid with wages instead of quarterly. This is great for compound growth, but it also means that superannuation balances for older workers will grow more consistently year round. For those on a part-pension, that super balance increase will need to be reported. If you haven’t updated your super balances, you could be debt to Centrelink for being over the limit. Reporting your financial changes to Centrelink will be necessary to avoid debt.
Gaining Positively By Ethically Minimizing Assets
With the new rules coming out in 2026, many Australians are trying to figure out ways to spend their money reducing assessable assets in a way that isn’t considered “wasting” their money. One of the common ways of doing this is moving funds to exempt assets. For example, spending superannuation withdrawals on primary residence renovations is common since the primary residence is exempt from the Centrelink assets test. Likewise, moving funds to a funeral bond (within the limit) and making gifts within the $10,000 per calendar year / $30,000 per five-year limit are ways of reducing your assessable assets to be back under the limit. However, it is important to keep in mind that depriving yourself of assets to qualify for a higher pension (the gifting rules) is considered a form of Centerlink fraud, and that money will be deemed to be within your access for five years, even if you can’t spend it.
Conclusion on Predictions for 2026
The 2026 landscape for withdrawing superannuation will be both positive and negative. Opportunities will be created with the Payday Super initiative and the higher contribution caps. However, more negative implications will come with higher deeming rates and more strict asset testing. Those who have “self-funded” savings will have a much more difficult time keeping the “safety net” of the Age Pension. Most successful retirees will be those who consider their super and their pension as one system. It is possible for Australians to preserve their standard of living and “entitlement” to government funds by strategically timing their withdrawals and by understanding the impact of every dollar withdrawn from the super system on their “income” as determined by the law.
FAQs
Q1 Does it impact my pension if I take out a lump sum from my super?
Yes, it will. The withdrawal may be tax free if you are over 60, but once the money is withdrawn, it will be counted as an asset, and will therefore negatively impact your pension under the asset test.
Q2 What will the deeming rates be for 2026?
The new lower deeming rate will be 1.25% from March 20 2026, and the new upper deeming rate will be 3.25% for that same time.
Q3 Can I give my super away to my children to get a higher pension?
Sure, but with some very tight restrictions. Centrelink does allow you to gift $10,000 a year (up to a maximum of $30,000 over a rolling five year period). Anything more than this will continue to be counted as your asset for five years due to “deprivation” rules.
