Media Release by Senator the Hon Kay Patterson

Deeming Rates Keep Pace With Higher Returns

The Minister for Family and Community Services, Senator Kay Patterson, today announced new deeming rates to apply to pension and allowance payments from 20 March 2004.

Senator Patterson said that the deeming rates would change from 2.5 per cent to 3 per cent for the first $35,600 of a single customer’s financial investments, and $59,400 for a couple.

The rates will increase from 4 per cent to 5 per cent for the balance of investments over these levels.

The deeming rates have not been changed since March 2002.

This change reaffirms our commitment to ensure pensioners and income support recipients receive their fair entitlement.

“The new deeming rates reflect the recent increases in the official interest rate and the higher returns available on a range of financial investments such as term deposits and shares,” Senator Patterson said.

Over 600,000 pensioners with deeming accounts should soon receive a return that better reflects those available in the market.

The financial industry indicates that over $20 billion of pensioner savings are held in deeming accounts.

The generosity of the deeming rules is clearly shown by the fact that income from investments is assessed only at the deeming rates; if pensioners earn more than those rates the extra income is not assessed.

“For example, a single pensioner who has $100,000 invested at 6 per cent receives $6,000 per year income, under the deeming rules only $4,288 would be assessed as income for their pension.

“A couple with $200,000 invested at 7 per cent receive an annual income of $14,000, the deeming rules mean that the income assessed is only $8,812.”

Senator Patterson said in addition to deeming, the generous pensions incomes test benefited all pensioners.

“Currently, single pensioners can have income of $120 per fortnight before the pension starts to reduce, while a couple can have a combined income total of $212 per fortnight before it affects their payments.”

“Most customers who currently receive a full pension will continue to do so as their assessed income will continue to be below the income test free area.

Senator Patterson: “While some customers may have a small reduction in payment due to the new deeming rates, higher investment returns combined with the generous income test means that customers are better off because their overall income will increase.

“I look forward to financial institutions passing on the increases as they have in the past.”

Further information is available from Centrelink by calling 13 2300.