Deeming rates on share portfolios

Ray thinks there is something not quite kosher going on with how deeming rates are applied to share portfolios – is he onto something or is there a reasonable explanation?

Q. Ray
Why is a share portfolio deemed on its overall value rather than its dividends? Is it legal or fraud?

A. Centrelink uses the overall value of a share portfolio rather than the actual dividends to streamline the assessment process. This means that Centrelink does not require as much paperwork to determine pension payments and can ascertain payment more quickly. And if the actual return on investment is greater than the deemed rate, the deemed income is what is actually assessed.

Deeming rates are regularly monitored against a wide range of investments available in the market to ensure they accurately reflect returns. They can be raised or lowered depending on the average returns and the cash rate set by the Reserve Bank of Australia (RBA). However, the reality is that changes to Centrelink’s deeming rates usually coincide with the indexation of Age Pension payment rates or income and asset thresholds. The thresholds are also indexed annually, on 1 July, in line with the consumer price index (CPI).

Related articles:
Deeming rates for Age Pension
Are deeming rates too high?

YourLifeChoices Writers
YourLifeChoices Writershttp://www.yourlifechoices.com.au/
YourLifeChoices' team of writers specialise in content that helps Australian over-50s make better decisions about wealth, health, travel and life. It's all in the name. For 22 years, we've been helping older Australians live their best lives.
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