July–September 2026 Updates: Age Pension Rates and Deeming, Aged Care Rebuild and Modelling Corrections

September 2026

Age Pension rates and deeming, a correction for defined benefit pensioners, and aged care rebuilt

20 September 2026 Age Pension indexation

The maximum rate rose to $1,237.70 a fortnight for a single and $933.00 each for a couple ($1,866.00 combined), up $36.80 and $55.60. Because the assets test cut-offs are set by the maximum rate, they rose too: a single homeowner now keeps a part pension up to $745,750 in assessable assets, a couple homeowner up to $1,121,000.

Deeming rates also rose, by half a percentage point on both bands, to 1.75% and 3.75%. That is the part worth attention. Deeming assumes your financial assets earn income at those rates whatever they actually earn, so higher deeming means more assessed income and — if the income test is what limits your pension — a smaller payment.

Who comes out ahead depends on which test binds. Full pensioners gain the whole increase. Part-pensioners limited by the assets test gain too, since deeming does not affect them. Part-pensioners limited by the income test with substantial financial assets may find the deeming rise costs more than the rate rise gives — 20 September is a cut for them, not an increase. The calculator applies both, so re-running your scenario will show which applies to you.

Unchanged: the full-pension thresholds, income free areas and deeming thresholds, all of which moved on 1 July. The Work Bonus is a fixed legislated amount and is not indexed.

A correction for defined benefit pensioners

Services Australia reduces the income it assesses from a defined benefit pension by a deductible amount — the tax-free component of the pension. What the calculator previously did not apply is the cap: since 1 January 2016 the amount that counts is limited to 10% of the gross pension for PSS, CSS and other civilian schemes. Military schemes — MilitarySuper (MSBS), DFRDB and DFRB — are excluded and keep the full amount.

You now choose your scheme alongside the deductible amount, enter the figure your fund reports, and the calculator applies the cap. For PSS and CSS members who had entered a large tax-free component, the Age Pension estimate was overstated and will now be lower.

Aged care rebuilt, and a real choice about paying for it

What was wrong

The August correction to the aged care entry probability made a real risk visible — and in doing so exposed a set of faults that had been sitting behind a feature that almost never fired. Four mattered:

• People who left residential care could re-enter and pay the accommodation deposit again, over and over. On a $400,000 deposit this produced a repeating spike in spending every few years.
• Household spending dropped when someone entered care and never returned to normalafter they left.
• A death in aged care set the person as deceased but did not apply the consequences — their super stayed on the charts and their defined benefit pension kept paying in full.
• The entry-age curve returned the same value for every age below 70, so a small share of runs had someone entering residential care at 60 and paying the deposit in the first year of retirement. Real incidence at that age is close to zero.

Underneath all four was a design problem: aged care was tied to the death-scenario setting, so a couple with both partners alive could not model care at all. It is now a per-person health event. Each partner is assessed separately, with their own entry age, their own deposit and their own length of stay. Stays vary in length rather than everyone staying an identical time, and entry is one-way — nobody re-enters care.

The entry probability is calibrated against AIHW admissions data: roughly a 42% lifetime chance of entering permanent residential care from age 65, a median entry age of 85, and about 54% of entries at 85 or older.

New: how you pay for the room

When you enter residential aged care you have 28 days to choose how the accommodation is paid: a refundable deposit (RAD), a daily payment (DAP), or a combination. The calculator now models all three. The daily payment comes from the room price at the government's Maximum Permissible Interest Rate — 8.43% from 1 July 2026 — so a $400,000 room is about $92 a day. That rate is fixed on the day you enter and never changes for your stay.

The obvious trade is the deposit's lost earnings against the daily payment's cost. The one people miss is the Age Pension. Under the Social Security Act 1991 a refundable deposit balance is an asset, but it is expressly excluded from the definition of “financial investment”, so it is not deemed — and its value is disregarded when your assessable assets are calculated. Money kept back to fund a daily payment stays in your portfolio, where it is both assessed and deemed. For someone on a part pension, that difference can outweigh the interest rate entirely.

Run your scenario both ways and compare the Age Pension line, not just the total cost.

New: care at home

The calculator has always modelled residential aged care and said nothing about care received at home — which is the far more common path. Of Australians who died aged 65 and over, around 80% had used aged care, and 84% of them entered through a home-based program rather than residential care. Many never enter residential care at all.

The new Care at home card models Support at Home, the program that replaced Home Care Packages in November 2025. You enter the annual value of the services you expect and the calculator works out your contribution: clinical care is free, while independence and everyday living services are charged on a sliding scale set by an income and assets test. The rates it produces match the My Aged Care fee estimator. Each partner is set separately, contributions stop at the lifetime cap shared with residential care, and care at home ends if you enter residential care.

Worth running even if you expect never to need residential care. For someone with substantial assets the everyday living rate reaches 80%, and a few years of it is a real number.

Also this month: income streams after a death

Additional income streams used to continue at full value after a partner died, whatever the income actually was. Each stream now lets you set whose it is and what share continues afterwards — 100%, a reversionary fraction, or nothing at all. That last option matters: a UK State Pension under the post-2016 rules generally cannot be inherited by a spouse, and many overseas and private pensions stop with the recipient. If you have modelled one, it is worth setting the share correctly and re-running with a death — the survivor's position is usually what decides whether a plan holds.

Thanks to the readers who reported the spending spikes, re-ran their scenarios and sent the results, and to the reader who spotted the income stream problem — that is what makes these findable.

August 2026

Aged care: refunds, a corrected entry model, and a new spending floor

Refundable deposits are no longer fully refunded

Under the Aged Care Act 2024, providers retain part of a refundable accommodation deposit (RAD) for anyone entering residential care from 1 November 2025: 2% per year, calculated on the declining balance, capped at five years. A five-year stay returns about 90.4% of the deposit — 9.6% retained, not the flat 10% often quoted, because each deduction shrinks the base for the next. People already in care before 1 November 2025 are grandfathered and keep a fully refundable deposit.

The calculator now deducts this automatically from the refund whenever care ends within your projection, and the aged care cost panel shows the retention and the net refund as separate lines. One consequence worth understanding: the refund is returned in nominal dollars, so a long stay erodes its real value on top of the retention — a $400,000 deposit after five years comes back as roughly $361,600, worth about $319,600 in today's purchasing power at 2.5% inflation.

The aged care entry model was wrong, and is now much harsher

The corrected model is calibrated against published data rather than assumption: a 41.9% lifetime probability of entering permanent residential care from age 65, a median entry age of 85, and about 54% of entries at 85 or older. The benchmarks are the AIHW/GEN admissions data and Cooper-Stanbury (2025), which puts the lifetime figure for women at 46%; the AIHW death-linkage study found 43% of people aged 65+ who died had used permanent residential care.

What this means for you: if your scenario uses probabilistic aged care, expect a lower success rate than your last run — potentially much lower on a tight plan. Nothing about your finances changed; the model simply stopped ignoring a risk that affects roughly two in five retirees. If you would rather see a specific scenario than a probability, switch to the deterministic setting and choose an entry age.

New: a spending floor

You can now set a minimum annual spending level in today's dollars — the essential costs you will not go below. Neither the guardrails nor the J.P. Morgan declining spending curve will cut beneath it. Expect a lower success rate with a floor set: rather than cutting, the model keeps drawing down and can deplete sooner. That is the point of the setting — it answers whether your plan survives without cuts you would not actually accept. Aged care, health costs and one-off expenses sit on top and are never reduced to meet the floor. Leave it at 0 to disable.

Thanks to the readers who suggested both the retention modelling and the spending floor.

July 2026

1. New Age Pension thresholds (1 July 2026)

Services Australia indexed the full-pension asset test thresholds, income test free areas, and deeming thresholds on 1 July 2026. The calculator now uses the new figures:

• Full pension asset threshold (homeowner): $333,000 single / $499,000 couple — up from $321,500 / $481,500
• Full pension asset threshold (non-homeowner): $600,000 single / $766,000 couple
• Income test free area: $226/fortnight single, $396/fortnight couple
• Deeming thresholds: $66,800 single / $110,600 couple

Higher thresholds mean more pension at the same asset level. For part-pensioners this is typically a few hundred to around $2,000 more per year depending on your situation — and because a higher pension means drawing less from your own savings, the difference compounds across a full projection. Payment rates themselves are unchanged until the 20 September 2026 indexation.

2. Pre-retirement projections now end at your last working year

Previously, the Pre-Retirement Calculator included the year you reach your retirement age as a contribution year — and the Retirement Calculator also modelled that same year as a drawdown year. One year, counted twice. Projections now model your working years as ending at 30 June before your retirement age: if you plan to retire at 60, your last accumulation year is the financial year you turn 59.

The visible effect: projected super at retirement is lower than before — by roughly one year of contributions plus growth. Nothing about your situation changed; the removed year is now modelled once, in the retirement phase, instead of twice. Charts and tables on the Pre-Retirement page now label each point with its 30 June date to make the timing explicit.

3. Sustainable spending results are now reproducible

The Retirement Manager's sustainable-spending calculation uses Monte Carlo simulation. Previously, each press of Compute drew fresh random market paths, so the same inputs could return recommendations several hundred dollars apart. The simulation now uses a fixed random sequence: the same inputs always produce the same recommendation.

We also fixed the simulation so investment fees apply inside the Monte Carlo paths — previously they were only applied in the main projection. Recommendations are slightly lower as a result, and more honest, particularly if you pay non-trivial fees.

4. Contribution caps for 2026–27

Already in place from the start of the financial year, listed here for completeness: concessional cap $32,500, non-concessional cap $130,000, bring-forward cap $390,000, Transfer Balance Cap $2.1M.

What you should do

Re-run your projection. If you keep records of past results, expect Age Pension figures to be higher, pre-retirement super projections modestly lower, and — if you use probabilistic aged care — a noticeably lower success rate than your last run. All three move in the direction of accuracy. As always, every assumption the calculator makes is documented on the Assumptions page, and the calculator provides general information only, not personal financial advice.