It’s worth checking to see if the new rates, which came into effect on 1 July 2019, may positively impact your pension entitlements.

How the deeming rates work and what’s changed

Deeming is Centrelink’s way of calculating the income pensioners earn on financial assets, regardless of the actual return. The main types of financial assets considered are:

• cash in the bank including savings accounts and term deposits
• managed investments, loans and debentures
• listed shares and securities
• some income streams such as super savings and income stream accounts
• some gifts you make

The deemed income is added to any other income you receive and is measured against the income test which, together with the assets test, determines how much pension can be received.

The deeming rates have been lowered to reflect the lower interest rates available in the market. As a result, people who are income tested may see an increase in Government income support as their financial assets will be deemed at a lower rate.

The new rates mean that any income received will be deemed to have received a lower income than it previously was to reflect the lower interest rates available in the market.

This means that, for singles, the first $51,800 of your financial assets will be deemed to have earned 1% and anything over $51,800 will be deemed to have earned 3%. If you’re a member of a couple and at least one of you gets a pension, the first $86,200 of your combined financial assets will be deemed to have earned 1% and anything over $86,200 will be deemed to have earned 3%. If you’re a member of a couple and neither of you receives a pension, the first $43,100 of each of your own and your share of joint financial assets has a deemed income of 1% per year. Anything over $43,100 is deemed to earn 3%. This change may mean an extra $1053 a year for couples and $804 a year for singles.

What do you need to do?

You don’t need to do anything. The changes won’t have any impact on your super, including any TelstraSuper RetireAccess income you receive.

If you receive a Government Age Pension and you have deemed income, the new deeming rates will automatically apply. Any additional pension payment you’re entitled to will flow through into your bank account from the end of September 2019, in line with the regular indexation of the pension and the new rates will be backdated to 1 July 2019.

To check the impact the changes may have on your pension, or find out more, go to https://www.humanservices.gov.au/individuals/news/changes-deeming-rates or contact Centrelink on 136 240 about your individual situation.

Need some help?

TelstraSuper Financial Planning can help you understand what your pension entitlements are together with advice about your super. Call TelstraSuper Financial Planning on 1300 033 166 or request a callback online.

This information is general advice only and does not take into account your individual objectives, financial situation or needs. Before acting on any advice you should assess whether it is appropriate for you and consider talking to a financial adviser. Before making any decision or acquiring any product you should obtain and review its product disclosure statement by calling 1300 033 166 or visiting our website at telstrasuper.com.au