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What are deeming rates?

The way they work is that Centrelink determines that your financial assets are deemed to earn a certain rate of return, regardless of what they actually earn. This return is used to assess your eligibility for entitlements such as the Age Pension.   Financial assets that can have deeming rates applied can include:

  • savings accounts and term deposits
  • managed investments, loans and debentures
  • listed shares and securities
  • some income streams such as account-based pensions

Many seniors feel hard done by with deeming rates as their money is often invested in savings accounts and term deposits which typically don’t generate the returns Centrelink “deems” they do.  Essentially you are deemed to be earning more than you actually are and this can affect your entitlements.

In May 2020 some steps were taken to help redress this issue.  The lower threshold rate was reduced from 1% to 0.25% and the upper threshold rate from 3% to 2.25%.  This was great news although many claim they are still too high.

This year the Government has made a further, albeit small, adjustment to the threshold limit effective from 1st July 2021.  The following table gives all the current rates and thresholds.

The lower the deeming rates, and the higher the threshold the better off seniors will be under the income test.

So do deeming rates seem about right to you?  Perhaps you are earning a little more or maybe not as much. We would love to know what you think. Please add your comments below.