31 Oct 2013

More than 740,000 Australian pensioners will have extra money in their pockets as a result of the lowering of the social security deeming rates from 4 November 2013, Minister for Social Services Kevin Andrew said.

The deeming rate will decrease to 2% from 2.5% for financial investments up to $46,600 for single pensioners and allowees, $77,400 for pensioner couples and $38,700 for each member of an allowee couple.

The upper deeming rate will decrease to 3.5% from 4% for balances over these amounts.

The deeming rules are a central part of the social security income test. They are used to assess income from financial investments for social security and Veterans’ Affairs pension/allowance purposes. They reflect the rates of return that people receiving income support payments can earn from their financial investments. If income support recipients earn more than these rates, the extra income is not assessed.

“This announcement means that part-rate pensioners and allowees will have less income assessed from their investments and receive a boost in Government income support,” Andrew said.

“Returns available to pensioners and other allowees have decreased since deeming rates were last changed, in March 2013. This announcement brings the deeming rates in line with available financial returns.”

National Seniors Australia, which lobbied hard for the last deeming rate cut in March 2013 after four years of no change and more recently during the election when it called for deeming rates to remain in line with the cash rate, welcomed the move.

“This will help some of the many who work hard at managing on a fixed income,” the organisation’s chief executive Michael O’Neill said. “Now we need to make sure the deeming rate remains in line with the cash rate.”

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

Written By Mark Smith in Financial Standard Online.

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