Yesterday’s announcement by the Australian Government regarding changes to deeming rates will put money back into the pockets of Senior Australians receiving the Age Pension.
What are deeming rates and how does it impact your Pension?
Deeming is Centrelink’s standardised way of calculating the income (or return) Pensioners earn on their financial assets, regardless of the actual return. Deemed income is then added together with any other income and is applied as the Income Test.
Deeming rates apply to the following financial assets:
- Cash in the bank – savings, term deposit and transactional accounts
- Superannuation savings – accumulation and income stream accounts
- Shares
- Managed investments and debentures
- Some gifts and loans
Up until yesterday deeming rates hadn’t changed in the last 4 years. The Government has been under increased pressure to reduce rates due to declining cash and interest rates.
From 14 July deeming rates will now be reduced from 1.75% to 1% on financial assets up to $51,800 (for singles) or $86,200 (for couples) and 3%, down from 3.25%, on financial assets over these thresholds.
The Families and Social Services Minister Anne Ruston announced yesterday ‘this means couples whose income is assessed using the deeming will receive up to $1,053 extra a year, while singles could pocket up to $804 extra a year.’
Here’s an example of how deeming is calculated on financial assets for couples and singles:
When do the deeming rate changes come into effect?
Senior Australians receiving the Age Pension will see the extra money come into their bank accounts from the end of September and the payment will be backdated to July 1.
We have now updated our Age Pension Calculator with the new deeming rates, click here to give it a try to see exactly what this change will mean for you.
We always love to hear from our customers about how changes to the Age Pension affect their retirement lifestyle. Share your thoughts in the comments section below.
I am on a Veteran Affairs full TPI pension + Centre link Disability Support Pension. Do these changes to the deeming rate have any affect to my current rates of payment?
Hi Gary
New deeming rates apply to the Age Pension but you will need to speak with the DVA and Centrelink regarding whether these changes impact your current payments.
Can you recommend a bank or institution where I can deposit my $85000 @3% interest?
We are all still looking for the 3% rate Leah! Perhaps if you find it you will share back on this page – thank you
Good day,
Re Deeming
I read your grid and can see, BUT please explain..what happens after that calculation? Do CL keep all that or what can you earn also, what about 50o)o rate?
Also looking at bank accounts say you have 20,000 and owe 2000 in a credit card at that date. Do they take it off balance? How often should we update bank records. I am 71 just finished work. Thanks
Hi Pat
You need to keep Centrelink up to date with changes to your personal and financial circumstances. You can do this easily via your myGov account.
With regards to credit card debts, Centrelink do not count this or deduct it when calculating your eligibility for the Age Pension.
Sorry I am not too sure what you mean by your first point. Give us a call on 1300 527 727 and one of our Age Pension Specialists can help work through this question to resolve.
Hope this helps.
More confused… thanks
Hi Di
Sorry for causing you more confusion. Maybe it would be better to give us a call on 1300 527 727 and one of our Age Pension Specialists can try an explain this more simply and tailor to your personal circumstance.
Hi,
My father is in a nursing home and is charged an additional amount each day based on his deemed investments. Nothing has changed yet (5/9/2019) as to a reduction in his additional daily fee. Will this be adjusted by end of September and a refund be forthcoming ?
I read on the DHS website that CL use deeming for both assets and income, including income streams from an account based pension. I understand how deeming applies to the asset value of my super, but how is deeming applied to the income stream I draw down from the super? Can you advise?
Thanks…John