Last week we promised an update on deeming thresholds. Along with the main income and asset threshold changes on 1 July the deeming thresholds will also be increased. This benefits all those whose assets are deemed to earn income by Centrelink. We have reported previously on the rates which remain frozen until 1 July 2025, but an increase to thresholds will be good news for many retirees.
Current deeming thresholds and rates
| Current thresholds | New thresholds (1 July) | Change | Current rates (frozen until 30 June 2025) | |
| Singles up to | $60,400 | $62,600 | $2200 | 0.25% |
| Singles Above | $60,400 | $62,600 | 2.25% | |
| Couples up to | $100,200 | $103,800 | $3600 | 0.25% |
| Couples Above | $100,200 | $103,800 | 2.25% |
What does this mean for you?
If you are on a full or part Age Pension – or are hoping to become eligible, it means that you may earn more Pension or may qualify as you will be ‘deemed’ to earn less income. Deeming rates are applied to financial assets which include:
- Your super balance
- Shares
- Bank savings
- Managed funds
- Annuities (some have special treatment)
- Home Equity Access Scheme (HEAS) advance payments
among others.
The higher thresholds will translate into slightly more income for many retirees. But deeming is not as straightforward as it seems, that’s why our very helpful adviser, Nicole Bell, has spent a lot of time recently helping answer Retirement Essentials member questions on the way Centrelink measures income.
The devil’s in the detail
Deeming and Defined Benefit Pensions
Russell asked:
‘I appreciate your deeming rates explainer, but it would be good to mention those on a Defined Benefit Pension as well as super.’
Nicole replied:
Hi Russell, thanks for your note. The assessment under the income test for those in receipt of a Defined Benefit Pension (DBP) can be a little complicated but isn’t affected by changes in deeming rates (at least the assessment of the defined benefit payment itself isn’t affected, but if other financial assets are held there may be an impact as a result of that). However, if your pension is indexed, it likely increases a little of your assessable income each year when the payment increases with CPI (usually July). As to how much of the defined benefit income itself is assessed is where the complexity can come in. Some such pensions are allowed concessional treatment and others aren’t. If you are already in receipt of an Age Pension you should be able to find out how much of your Defined Benefit Pension is classed as ‘assessable’ income through the income and asset details section of your Centrelink MyGov account.
Should Sheila reapply?
Sheila asked:
Q. We are a couple who do not receive an Age Pension but do have a Commonwealth Seniors Health Card (CSHC). The income limit meant we were just over the threshold.
Since COVID our income remains similar but our expenses are now much higher than prior to that period. My husband is now 80 and I am 79 later this year. We live quite frugally and have not been able to budget for a real holiday since 2016.
Would you advise on whether it is in our interests to reapply?
Nicole responded:
Hi Sheila, thanks for reaching out. Life has certainly become much more expensive of late. I suggest you start with our free online Age Pension Eligibility Calculator to assess your current position, as eligibility can change over time. It is possible you may now be eligible for some support. If you would prefer to discuss your individual situation and what is affecting your assessment with someone, I would recommend an Entitlements Consultation. It is a 30-minute phone call, and you should walk away with a clear understanding of where you stand regarding the Age Pension and whether you may be eligible to apply.
How does super affect retirement?
Paul is uncertain about super. He asked:
Q. Does your superannuation come into play when you are receiving a pension?
Nicole answered:
If you are Age Pension age then Centrelink will recognise your superannuation money as an asset for the asset test calculation, and your super balance will be subject to deeming for the purposes of the income test. So it’s a two-step process.
What about the Commonwealth Seniors Health Card?
David wonders how deeming affects his concession card:
Q. I have an Account-Based Pension (ABP) from which I annually withdraw the minimum amount required by the legislation. My wife is in a similar position but she is nine years younger at 63. Do both the annual withdrawal income and the deemed earnings on the pension balance count toward my entitlement for a CSHC?
Nicole replied:
This is often confusing for people. The balance of your Account-Based Pension is generally subject to deeming for the purposes of income test calculation. The actual amount of income that is drawn each year, be it the minimum or higher, is irrelevant to the calculations for your Age Pension entitlements (with a few exceptions for pre-2015 accounts which may have different treatment).
Eric has an investment property
Eric wonders how Centrelink views investment properties:
Q. I am on a part-Age Pension and own an investment property. Does Centrelink apply the actual rental income or apply the deeming rate against the value of the property for the income test?
Nicole clarified the rules:
Thanks for your question. The value of your investment property is not subject to deeming if it is held in your personal name/s. Centrelink looks at the rental income less a few allowable deductions, usually obtained from your tax return. It’s a different story for properties held in a Self-Managed Super Fund (SMSF) though.
Moving goal posts
Nearly all retirees will benefit from these changes to the thresholds – those on an Age Pension and those who are self-funded as well. The last few weeks we have spent a lot of time reporting on changes to superannuation, Age Pension entitlements and other concession cards. Are you bewildered by what seem to be rapidly moving goal posts? Or do you take such changes in your stride?
Our advisers can help you in a number of ways including
- Retirement Forecasting (look at what your income, assets and spending could look like over your retirement).
- Understanding more about super (get the most out of your super in retirement).
- Maximising your entitlements (making the most of your financial resources and Centrelink)
- Understand impacts of your home mortgage (assess the benefits of repaying, or maintaining your mortgage?)
Does the purchase price of a “home” in a Retirement (Over 55 Resort) Village that is managed under the Manufactured Homes (Residential Parks) Act 2003 and which attracts a monthly maintenance / management fee of around $420/month class as an “asset” in the asset test for a pension?
Hi Trevor, great question! Technically no the property would never be assessable as an asset however the important thing to know is whether or not you will be assessed as a homeowner or not. It depends on how much you spent to ‘buy’ the home. Centrelink calls it the “extra allowable amount” and it is the difference between the assets threshold for homeowners and non-homeowners – currently $242,000 – and it is the same whether you are single or a couple. If you spend more then this amount to buy in then you are considered a homeowner and neither the property nor the fee you paid are counted as an asset. If you spend less then that though, then you are classed as a non-homeowner and as such the property is not counted as an asset BUT the amount you paid to buy in IS counted as an asset and it counts for as long as you continue to live there because as a non-homeowner you are afforded a higher assets threshold then homeowners.
Hi Steve
We own a Manufactured home located in a Lifestyle Village under a land lease arrangement. With this we pay a weekly rental to live there. Once I’m back on the pension how do I apply for rental assistance from Centrelink.
Hi Gari, thankfully Centrelink assess your eligibility for rental assistance as part of the pension application so it will happen automatically. You just need to provide a formal letter/document from the company managing the village confirming the weekly rent you pay so that Centrelink can determine how much rental assistance to pay you.
Hi Trevor, can I ask if you live in the over 55’s Village or live elsewhere thus asking if the purchase into a Manufactured Home estate would be considered an asset.
Is it your prime residence or an investment.
We ask as we are in a similar situation.
We do not have a financial advisor, due to AMP reshuffle due to financial inquiry in 2019/20. We are aware having our super in AMP is maybe not the best place for growth, but as semi retired – we work in own business part time – and receiving a partial pension as 71 yr olds not sure whether it’s just too late to worry about moving it. My fund balance is micro, my husband is small/medium. Every ‘fund manager’ we speak to is after a fee to transfer to ‘their’ product – we have been down that route previously. Do you have any suggestions.
Hi Joslyn, sorry to hear that you don’t feel valued by the others you’ve tried to get help from. We could potentially assist you by going through a few calculations to show you what the future will look like based on your current situation and then compare it to what you could potentially achieve for yourself if you were to make changes. We don’t make the changes for you or try to get you to bring your money over to us, we want to help you understand your situation, options and the pros/cons so that you can then decide for yourself if things are good enough as is or if it perhaps is worth making some changes to improve your long term position. There is a small fee for this consultation service so I understand if you are hesitant but if you would like help making an informed decision, CLICK HERE to make a booking.
Hi Joslyn. I have my super in AMP and have had for about 25 years now. I used to have a financial planner whose advice fee was 1-2% but who didn’t give me any advice so I stopped signing the paperwork that paid his fee. I have always determined where I wanted to invest myself, after some research, and felt his services were basically redundant. AMP have a great website and you can pretty much do everything yourself. I usually do an in-depth analysis yearly to see if I want to switch my funds into different investments and also just gloss over what’s happening regularly. I don’t switch every year and some of my investments have remained the same for the whole 25 years, so you don’t have to be constantly involved if you don’t want to. You should go into AMP’s website for super and you will find that they provide a couple of complimentary consultations which may make you feel more confident about your super being with them. Also you can look up the performance of all the different investments they have and I am sure you will be pleased at how well most have performed, particularly in the last six months.
I, too, was concerned with all the flak going around with the financial enquiry and decided to see who I could move to that was better than where I was, but discovered after much researching that there really wasn’t anyone better, so I stayed.
During Covid and up to last year the markets have been poor, but that was with all super providers, but since last November all funds with share components and particularly foreign (mainly US) shares have picked up heaps.
If you are in a very conservative or “cash” type fund the returns are relatively low because so is the risk level. If you go into a more balanced fund the return is higher. You could look up the article re risk versus reward on this website. You could also look up the Australian share market chart and also the US Dow Jones and check them out from inception and you will see that, like houses, they keep going up.
But no it is never too late to look at your super and see if you can manage it better.
Amazing how Retirement Essentials can help like us. I’m 70 and my wife is 67 (semi retired) and I’m not receiving any benefits and pension from the government.
The application form for the Seniors Health Card, only asks if you have an account-based income stream (Question 73). If the defined Benefit pension is relevant, how is the DBF assessed?
Hi Judith, good call out! If the type of DB you receive is relevant then the necessary info is covered by your tax return. If you are no longer required to lodge a tax return then there is nothing assessable in the DB to impact your claim.
Hi guys I’m on the age pension but I’m also on the work bonus scheme working x amount of hours a fornight nursing perhaps about 20hrs a fornight pay tax get super am on casual does deeming come into this as I’ve been working for 8 mths and as of the 1 July getting a to up of $4000. when i report each fortnight i still get the full pension – your thoughts please ?
Hi Chris, deeming is not applied to employment income or the work bonus. Deeming is Centrelink’s way of determining what income you have generated via your financial assets such as bank accounts, shares, superannuation etc. Employment income is assessed as income based on the gross amount – any available work bonus credits.
Q. I own a third share of a holiday home along with my two sisters who each own a one third share. The market value of the property is put at $1. 45 million. I am thinking of applying for a part age pension in the next six months. I am 69 years old and my wife, who is 80 receives a part age pension already. Does Center Link take the total value of the aforementioned property into account or just my third share ( $483,333 ) when assessing my assets? The property is not rented out and does not yield any income.
Hi William, good question! Thankfully Centrelink only assess your share of an asset, not it’s total value.
Hi I am 63 years old and retired I have an accumulation super policy around $200,000
If I withdraw say $45,000 to purchased a new car does the super policy stay in accumulation mode
I will receive around $300,000 in 6 months time from my mothers estate and it is my intension to deposit most of this amount into my super policy’
Cheers
Linda
Hi Linda, you can make a withdrawal out of your accumulation account and leave the remaining balance in accumulation but your super fund may have a particular process/lead time so you might want to enquire now so you can plan ahead.
Is it compulsory to withdraw from Super once I reach my retirement age (67) and start applying for centrelink pension? ( because I have the impression that, if I don’t start withdrawing from my super, money insdie the super is not counted as an asset , but only deeming as an income by centrelink?)
Hi Hahn, it can be a bit tricky understand the rules and impacts to then decide which way is the best way for you to go. I’d recommend booking in a consult with one of our specialists (HERE) as they can discuss your specific situation because what is best for one person may not be best for another.
I am 68 and intend to retire in the next few months. I have about $345000 in superannuation and other money. I am wondering would it be better for me to put my super into an income stream account before I retire or after I retire.
Also do you help with filling out the Centre Link forms to apply for the Aged Pension?
HI Ann, we can help you fill in the application forms but before applying you might want to book a CONSULTATION to discuss the best option for your superannuation.
hi, I am 67 and receive a pension, not a full pension as my husband also receives a pension, he also receives social security from the US. I have a super in the balance of $140,000+ but it is all in cash and I do not draw down an income from it. Is this super subject to deeming rates?
Hi Cherie, yes superannuation has the deeming rates applied to it regardless of whether it is in pension mode or in accumulation.
Hi.
My house is on land that has about 12 hectares . I gather that this is counted in my assets even though it is my place of residence. Is this correct? And does this mean that i am counted as non house owner and have a higher assets amount rather than that of house owner
Hi Selina, it is true that land in excess of 2.5ha is potentially assessable but there are some ways it can be exempt and if not exempt you can potentially declare it of low value. To explain how it all works it would be best to have a consultation which you can book HERE.