What’s happening with deeming rates?
Interests rates are now at record lows with the Reserve Bank cutting the official rate to just 0.1%. Deeming rates are now also the lowest they have ever been. The lower threshold is at 0.25% with the upper deeming rate of 2.25% for investments including cash applying above $53,000 for singles and above $88,000 for couples.
How high have they been in the past
In 1996 deeming rates were much much higher. The lower rate was 5% and the upper rate was 7% so today’s low rates should be good news for pensioners shouldn’t they?
In reality, it is not the deeming rates that matter by themselves. What really matters is what the rates are in comparison to what you are actually earning on your investments. Cash rates were also much higher back then so your term deposits were earning a lot more.
So are today’s deeming rates good?
If you can earn 5% on your financial investments then the current rates are good for you as your pension will be less affected than if your actual earnings were used. But many Seniors have their savings in bank accounts or term deposits and as Ian Henscke from National Seniors recently said: “Tell me who in this environment is getting a return of 2.25% on their term deposit bank accounts.”
What does this mean for your entitlements?
If most Seniors are earning less on their investments than the current deeming rates then Centrelink is probably overestimating their earnings. For part pensioners this means they get less Age Pension. So are the current deeming rates fair or should they be lowered? You can make a comment below
Ps If you are thinking of applying for the Age Pension or the Commonwealth Seniors Health Card don’t delay. You might still be able to get the Government’s $250 stimulus payment if you get your application approved by the 27th November. You can check what you are entitled to receive here
They must be lowered,
in order to match the present situation.
Yes deeming rate shud be lower than it is now 0.25% and 2.25%
If interest rate is only 0.1% then the lower deeming rate shud match that and the higher deeming rate shud go down to 1%
I agree.
My current Term Deposit rate is 1.05 % for 12 months. If I took out that same term Deposit today it would be at .65%. Something stinks.
Of course they should be lowered. They should reflect reality and automatically be lowered when interest rates are lowered.
The same as they do to fuel and alcohol excise only in reverse.
The deeming rate is so dishonest by the government. In effect its theft by the government.
This is dishonest of the Federal Government p and there should be a class action not unlike the current Robot debt debacle .
You can almost see the Politician’s sitting around the table scheming how they can find ways to not pay age pension. We planned our retirement based on the law st the time of retirement and the government change legislation st their will and make it retrospective not the date they change the legislation which is fairer. It’s all so complicated that not even C’Link staff understand.
Look at Newstart/ Jobseeker sending people in poverty . Look at the recent announcement of incentive to employ up to 35 year olds discriminating over that age group creating an increase in mental health issues because people cannot afford to eat . Narcissistic politics is alive and well.
cut deeming rates to 1%. sick of the government robbing the pensioners.
You were encouraged to build a super nest egg but you are now penalised. My retirement income is now less than the full pension because I have a small amount of super.
This doesn’t make sense.
My allocated pension investment since the start of COVID19 has gone backwards so the existing deeming rates are much too high. When I was first eligible for a part pension based on income I think the deeming rates were about 1 % and 3%, i.e. about a ration of 3 to 1. So based on the 0.25% the other value should be about 0.75%
Yes very unrealistic but government really not interested as it will only cost them more. Honestly until us plebs can reign in their salaries, their pension schemes there nearly automatic increases by their so called independent bodies we have no control and no hope. Realistically until their conditions mimic the same bodies that we have to engage with as workers for wage increases, then the whole system is unfair. Tie their increases to the same levels as the rest of the workers, CPI and Fair Work Australia regulations. Time to stop overall rorting.
Yes – deeming rates should be lowered so part time pensioners are not penalised. It is hard enough to try and earn even 1% on our Term Deposit in current situation.
deeming rates should be in step with the official cash interest rate published by the reserve bank if they go up or down so does the deeming rate.
Well I’m not that clever but any politician worst his salt would not take much convincing that the deeming rate is much higher than the average earn in part pension term bank deposits. The real question is will they look at it realise the problem an fix it . We don’t need a royal commission or a study or inquiry. Just have the treasurer Phone the reserve bank get the facts an put it to parliament for correction. Should not take a week. Ps I’d like to see hear any member of parliament vote against such a correction. What’s wrong with the minister of aging . To busy or just a dud from looking after older Australians. Give yourself an upper cut minister.
Deeming rates have to be lower, many pensioners are struggling with virtual no income from their investments. Pensioners are drawing down on their capital to make ends meet.
Deeming rates should be lowered. My mother is in a nursing home and pays an extra daily fee on her money . She doesn’t earn anything like 2.25% that she is deemed on the money over $53,000. It’s very unfair.
Deeming rates should be in line with the actual official rates.
Deeming rates should be reduced . We need to act now to convince the Treasurer that this is important.
Remove deeming altogether and go on actual rates that are earned on investments
Please make our deeming rates at par with the banks and give us a pensioner concession card with the same benefits as the other pensioners.We are not asking for any cash handouts but to be treated fairly by the government which would be an initiative for the younger generation to be self reliant in the future.Please consider our pleading as we are hurting too.
deeming is simply elder abuse.to rob us ‘oldies’ whim have work all our lives and now seek to do more than just ‘exist’ in our later years. Reduce the politicians pensions to the same as centrelink / government pensions and elligible earnings rates and see how long it lasts.
Deeming rates on fixed term deposits was .36 yesterday. Almost nothing to be earned.