Deeming Rate

The prime minister has announced a moratorium on CentreLink deeming rates for those on the aged pension. The deeming rate is an estimated earning on an individual's assets--for most, their life savings. Financial assets over $53,000 are deemed to earn 2.25%. In a bid to woo the life-experienced voter, Mr. Morrison said he will freeze this rate for the next two years.

Now, hold on a minute! We are talking about individuals who have been around the block and know and thing or three.

The RBA began lowering the official interest rate in 2010. Until yesterday, the interest rate was 0.1%, a long way shy of 2.25% Many rely on their saving to support their life, avoiding the risky equities market for the security of a bank account getting zero or very little interest.

The government has been gouging these folk for years.

My vote goes to any party who declares the deeming rate on saving to remain the same (or lower) in perpetuity and not a measly two years. If interest goes up to 4.5% some people MAY recoup the losses they endured under the present regime.

 

2 comments

For how many years has Centrelink kept the gifting amounts unchanged?

The limits for gifting are $10,000 in any financial year, but limited to $30,000 over five years. 

I am sure $10,000 from many many years ago is not the same value today.

Deeming rates are also higher than amounts most pensioners receive from their bank.

Anyone who has money to gift obviously doesn't need the pension.  I certainly don't have money to give away to other people.  I prefer to eat, keep the lights on  and a roof over my head.

Can't see the point of people giving money to their kids, and going without themselves.  Parenting was a bit remiss there in not teaching the kids the value of a dollar and how to stand on their own two feet, just as our parents taught us - or at least mine did.

 

John's inability to gift has no bearing on deeming or gifting for that matter. Maybe those with money to gift don't need the age pension but they can certainly be entitled to receive a part or full pension. Check the pension assets test

Homeowner
Single $270,500
Couple $405,000

Non-homeowner
Single $487,000
Couple $621,500

Notional rates click here  were designed as a way to encourage people to strive for more returns on their wealth because some were trying to maximize their pension by minimizing their actual income . By earning a higher rate of income than the maximum suggested rate, you can essentially earn bonus income that is not assessed in the income test for old age pension.

The problem is that in an environment of record low interest rates, such as today, it can be difficult to find a bank that offers senior savings accounts or time deposits with an interest rate of more than 2.00% per annum. But if you're willing to take on a higher degree of risk, you can earn higher returns by investing in other asset classes such as stocks, bonds, or real estate. Investment funds such as ETFs (exchange-traded funds) can be an easy and inexpensive way to access a diversified portfolio of such assets.

2 comments



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