Deeming Rates To Be Lowered

The Australian Government is lowering the social security income test deeming rates.

This is to reflect the recent reduction in interest rates and the impact the global financial crisis is having on returns on pensioners’ investments.

The deeming rate will change from 4 per cent to 3 per cent for the first $41,000 of a single pensioner’s financial investments ($68,200 for a couple). It will also shift from 6 per cent to 5 per cent for the balance of financial investments over these amounts. The changes will come into effect from November 17, 2008.

Payments affected by the deeming rate include means tested pensions, such as the Age Pension, Disability Support Pension and Carer Payment, income support allowances and supplements, such as Parenting Payment and Newstart, paid by Centrelink and the Department of Veterans’ Affairs.

Deeming rates are set to reflect returns on investment available to pensioners and other income support recipients. The lowering of the deeming rates mean that part rate pensioners paid under the income test, with financial investments mainly in term deposits, shares, managed investments and other accounts, may receive an increase in their pension payments, to reflect the reduction in their assessable income.

Individual results are heavily dependant on individual circumstances. Pensioners already paid at the maximum rate will have no change to their pension payments.

The deeming rules are a central part of the social security income test and are used to fairly assess income from financial products.

Those with high levels of investment income should contact Centrelink on 13 2300 to clarify their individual circumstances and the impact of the deeming adjustment.

Source: Media Release from the Minister for Families, Housing, Community Services and Indigenous Affairs.