Pension Deeming Rates to be Lowered

For those who are unaware, pension deeming rates are a part of the social security income test, and are used to assess income from financial investments for social security and Veterans’ Affairs pensions and allowances. They reflect the rates of return that these individuals qualify for on their financial investments.

As of the 20 March 2015, the deeming rates throughout Australia were lowered to:

• The lower deeming rate will decrease to 1.75% from 2% for financial investments up to $48,000 for single pensioners and allowees, $79,600 for pensioner couples, an $39,800 for each member of an allowee couple; and
• The upper deeming rate will decrease from 3.5% to 3.25% for balances over these amounts.
  The main reason behind the decreasing of deeming rates is that the returns available to pensioners and allowees have also decreased. If the income support recipients earn more than these rates stipulate, the extra income will not be assessed for the social security test.

The payments affected by the deeming rates include:

• Income tested payments
  o Age pension
  o Disability support pension
  o Carer payment
• Income support allowances and supplements
  o Parenting payment
  o Newstart allowance

Ref: Minister for Social Services media release, 16 February 2015

This article is provided as general information only and does not consider your specific situation, objectives or needs. It does not represent accounting advice upon which any person may act. Implementation and suitability requires a detailed analysis of your specific circumstances.