Government to reduce pension deeming rates

The Australian Government will reduce the pension deeming rates from 20 March 2013 to benefit more than 740,000 pensioners by better reflecting returns available to them from their financial investments.

Deeming rates reflect the standard rates of return that pensioners can earn from their financial assets. They are used to determine how much pensioners receive under means testing rules.

The Minister for Families, Community Services and Indigenous Affairs, Jenny Macklin, said the Government was announcing the change to give pensioners and other income support recipients certainty about their future payments.

“This decision will provide part-rate pensioners with an average pension increase of $6.80 per fortnight,” Ms Macklin said.

“This will help take some of the financial pressure off pensioners and help them make ends meet.”

The lower deeming rate will decrease from 3 per cent to 2.5 per cent for financial investments up to $45,400 for single pensioners or $75,600 for a couple.

The upper deeming rate will decrease from 4.5 per cent to 4 per cent for balances over these amounts.

Ms Macklin said changes to deeming rates are generally made at the pension indexation points to minimise disruption for pensioners.

“This change comes on top of another increase to the pension under Labor’s new indexation system,” Ms Macklin said.

“From March 20 this year, pensioners and some income support recipients will receive both this indexation increase and the new Clean Energy Supplement.

“Labor’s historic pension reforms have already delivered increases to the maximum rate of pension of $172 per fortnight for singles and $182 per fortnight for couples.

“Labor understands the pressures on pensioners and working families. In contrast, Tony Abbott plans to claw back support for pensioners and families.”

The Minister for Employment and Workplace Relations Bill Shorten said the decision will benefit lower income Australians.

“Labor is the party of the fair go, and we will always look out for lower income Australians,” Mr Shorten said.

Payments affected by the deeming rate include means tested payments, such as the Age Pension, Service Pension, Disability Support Pension and Carer Payment, income support allowances and supplements such as the Parenting Payment and Newstart.