The Australian Government announced on Friday 6 March 2009 that it will reduce both the upper and lower deeming rates by 1% each, down to 3% and 2% respectively. This is as a result of the ongoing global financial and economic crisis, and its impact on investment returns. This will apply from 20 March 2009.
In addition to this, the regular revaluation of all shares and managed investments held by pensioners will be undertaken by Centrelink, also on 20 March 2009.
The new rates are outlined in the table below:
Source: Media Release – 6 March 2009, The Hon Jenny Macklin MP, Minister for Housing, Community Services and Indigenous Affairs: Government further reduces deeming rates.
The deeming rates are used to assess income for social security, pension and allowance purposes, from financial investments such as bank accounts, term deposits and securities.
The deeming rates are used to assess income for social security, pension and allowance purposes, from financial investments such as bank accounts, term deposits and securities.
Example of the effect of a reduction in the deeming rate:
A single pensioner has $100,000 invested at 4% and receives $4,000 per year as income. From 20 March 2009, $2,590 will be assessed as income for their pension (ie the first $41,000 is deemed at 2% and the balance of $59,000 at 3%). Prior to 20 March 2009, $3,590 would have been assessed.
Based on the new deeming rates from 20 March 2009, the maximum amount held in financial investments only, to receive the full rate of pension/allowance:
Pensions and other Income Support Payments to also increase as a result of Indexation
The Australian Government has also announced the following increases as a result of indexation:
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an increase of $7.70 per fortnight in the maximum single pension, taking it to $569.80 per fortnight, and $6.40 per fortnight in the maximum pension for each member of a pensioner couple, taking it to $475.90 per fortnight.
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an increase of $4 per fortnight in the maximum allowance for single people (aged 21 or over with no children) taking it to $453.30 per fortnight.
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CPI increases to Newstart Allowance, Partner Allowance, Sickness Allowance, Widows Allowance and Parenting Payment Partnered will also apply.
Source: Media Release – 6 March 2009, The Hon Jenny Macklin MP, Minister for Housing, Community Services and Indigenous Affairs: Indexation delivers increase to Pensions and other Income Support Payments