Deeming Rates Drop

I am pleased to announce that around 600,000 pensioners will see an increase in their payment because of a cut to the social security deeming rates on 20 March 2002.

The lower deeming rate will reduce from 3 per cent to 2.5 per cent. This rate applies to the first $33,400 of a single customer’s financial investments and the first $55,800 for a pensioner couple (see attachment).

The deeming rate for financial investments above these amounts will drop from 4.5 per cent to 4 per cent.

This will be a significant boost for hundreds of thousands of pensioners who receive a reduced pension under the income test.

I have reduced the deeming rates in response to decreases in interest rates and market investment returns that have occurred since the current deeming rates were set. It is important that we look after our aged community and make sure that the deeming rates are set fairly and realistically.

Payments to customers (including Veterans’ Affairs pensioners) will be automatically adjusted from 20 March, at the same time as indexation increases to basic pension rates. Coming together these changes will be simpler for pensioners.

The deeming rules have brought simplicity for pensioners, and encouraged them to earn more from their savings. If pensioners earn more than the deeming rates, income is assessed only at the deeming rates.

The deeming rates are used by Centrelink to assess income from financial investments for social security pension and allowance purposes. If people want more information they can call Centrelink on 13 2300.

Attachment

Deeming rates to apply from 20 March 2002

• 2.5% for the first $33,400 of financial investments held by a single customer;
• 2.5% for the first $55,800 of financial investments held by a pensioner couple;
• 2.5% for the first $27,900 of financial investments held by each member of an allowee couple; and
• 4% for any financial investments above these amounts.