6 April 2010

Pensioner Deeming Rates Increased on 20 March 2010


Deeming rates increased on 20 March 2010:

As the economy recovers from the global economic crisis, rates of return on investments are also beginning to increase.

As a result, the deeming rates, which are used to assess income from a range of financial investments held by pensioners and other income support recipients, will also increase on 20 March from the record low levels during the global economic crisis.

The lower deeming rate will increase from two per cent to three per cent for financial investments up to $42,000 for single pensioners or $70,000 for a couple.

The deeming rate will increase from three per cent to four and a half per cent for balances over these amounts.

Age pensioners, on average, hold around $46,000 of deemed financial assets such as cash, term deposits, shares and managed funds.

The deeming system, introduced in the early 1990s, sets a rate of return that pensioners can reasonably be expected to achieve on their financial investments. The deemed income calculated from a pensioner's financial investments is used for the pension income test, rather than the actual income. This helps provide certainty to pensioners week to week.

Pensioners with financial investments that attract higher returns than the deeming rates will still only have their income assessed at the deeming rates. Any additional income from the financial investments are not assessed. Cash term deposit interest rates available at the major banks are now around six per cent per annum.

Deeming rates are set by the Australian Government to reflect returns on financial investments available to pensioners and other income support recipients. The new deeming rates remain lower than when the Government came to office.

A regular revaluation of all shares and managed investments held by pensioners will also be undertaken by Centrelink on 20 March 2010. This occurs automatically every six months, and pensioners can also request an individual revaluation at any time.

Payments affected by the deeming rates include means tested payments, such as the Age Pension, Disability Support Pension, Carer Payment, Parenting Payment and Newstart.

Full details of all rates and thresholds to be indexed on 20 March are available on Minister Macklin's website.

(Source: Minister for Families,Housing, Communities Services and Indigenous Affairs)

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