Pensioners will have two reasons to smile in September with the scheduled increase to the pension coinciding with the deeming rate cuts.
Single pensioners could be up to $804 a year better off and couples $1000 a year better off after September’s new deeming rate drop, new modelling from AMP shows.
The deeming rate change, which will be backdated to the start of the financial year, will mean single pensioners will receive a lump sum of up to $178 and couples up to $234 once the change kicks in.
Individuals will receive a maximum fortnightly pension boost of $30.92 for non-homeowners with financial investments up to $540,000, while non-homeowning couples with a maximum $670,000 in total investments could receive a fortnightly pension increase of $40.50.
Deeming applies to financial investments such as listed and unlisted shares, insurance bonds and saving and term deposit accounts, among other assets.
“Deemed income is added to a recipient's social security assessable income from all other sources and the total is then used to calculate the rate of social security entitlement under the income test,” said AMP technical strategy manager John Perri.
The deeming rate change date will coincide with a regular scheduled increase to the Age Pension.
“Pensioners will have two reasons to smile in September with the scheduled increase to the pension coinciding with the deeming rate cuts,” said Mr Perri. “Although the changes for the vast majority of pensioners are relatively small, having some extra money in their budgets to tackle cost-of-living expenses is a positive thing.
“The pension is means tested and looks at a single or couples’ level of financial investments, income and assets, to determine how much they receive each fortnight.
“Having a good understanding of how many investments and other assets you can hold before your pension is impacted, and by how much, is a key tool to help plan for retirement.”
Are you looking forward to the deeming rate change? Will you then be eligible for the Age Pension?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.
Join YOURLifeChoices, it’s free
- Receive our daily enewsletter
- Enter competitions
- Comment on articles