Are you losing out to deeming rates?

Ray has questioned the method of applying deeming rates to shares.

share portfolio

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).

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    COMMENTS

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    john no
    18th Sep 2017
    11:25am
    After the last pension increase we were over $8 a fortnight worse off as our income had increased, nothing had changed except the value NOT DIVIDEND of our Woolworth AND West Farmer Share values had increased, Perhaps the Government could use the Center Link system to increase the Income tax receipts.
    Ahjay
    18th Sep 2017
    11:30am
    The adjustment is made at the peak of the reporting season when the value of my super is at it's highest, when the dividends go in, is revalued as a whole, I then lose 7.8% of my pension until next reporting season.
    Just another way to make sure I will never accumulate enough to get off the pension completely.

    18th Sep 2017
    2:19pm
    You have a share portfolio and still receiving the pension
    Can't complain really
    ozirules
    18th Sep 2017
    3:55pm
    every right to complain Ahjay, having a share portfolio doesn't put him up there with the Packers, Raphael, he's probably got a few bob put away in shares to try and get a better return than the banks give. Wasn't this what the 'deeming' process was designed to encourage. Or would you rather see the pension only go to those with absolutely no back up funds for emergencies.
    Ahjay
    18th Sep 2017
    4:42pm
    You only need a couple of ETF's which you can buy for mall amounts to have diversified portfolio. Where can you get the 7.8% the government takes off you if you increase your income or net worth?
    Anonymous
    18th Sep 2017
    6:54pm
    i thought anything over $41k is deemed at 3.25%, way less than average dividend income of 4-8% gross
    Manne
    18th Sep 2017
    6:54pm
    Yes, Another problem is with CBA share holders, CentreLink still values them at $87 a share vs about $76 . This means 1,000s more in assests which I do not have and pension is reduced!


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