Media Release by The Hon Jenny Macklin MP

Government further reduces deeming rates

The Australian Government has further reduced the deeming rates to reflect lower returns available to pensioners from financial investments as a result of the global economic crisis.

From 20 March 2009 the upper deeming rate will decrease from 4 per cent to 3 per cent for the balance of financial investments over $41,000 for single pensioners or $68,200 for a couple.

The lower deeming rate will decrease from 3 per cent to 2 per cent for balances up to those amounts.

Part rate pensioners paid under the income test, with financial investments mainly in term deposits, shares, managed investments and other accounts, may receive an increase in their pension payments, to reflect the reduction in their assessable income.

Individual results are heavily dependent on individual circumstances.

In addition, a regular revaluation of all shares and managed investments held by pensioners will be undertaken by Centrelink on 20 March 2009.

This is a regular revaluation and will ensure that the most recent available value of pensioners’ shares and managed investments is used to determine their rate of pension.

Under legislation, regular financial asset revaluations occur every six months, in March and September.

Payments affected by the deeming rate change include means tested payments, such as:

  • Age Pension, Disability Support Pension and Carer Payment; and
  • Income support allowances and supplements, such as the Parenting Payment and Newstart.

Payments made by the Department of Veterans’ Affairs are also affected.

Deeming rates are set to realistically reflect returns on investment available to pensioners and other income support recipients.

The latest reduction in the deeming rate is another decisive move by the Australian Government to ease financial pressure on pensioners.

It recognises that many pensioners and social security recipients who also rely on own-source income have been adversely affected by the global economic downturn.

This is the third reduction in the deeming rates since November 2008.

Deeming rates are now half what they were for much of last year and are at their lowest since 2004.

The Government will continue to take decisive action to uphold the integrity and fairness of the social security system in the face of on-going events in financial markets and the wider economy.