14th Apr 2016
FONT SIZE: A+ A-
Deeming rates: is there a fairer income measure?
house icon and percentage sign on opposite ends of a see saw

Deeming rates cause much consternation, largely due to the fact that for many people with money in term deposits and savings accounts, the rate at which their income is deemed is usually higher than the actual rate of interest paid. Brian is one such member who is incensed at the unfairness of the measure.

Q. Brian

Are you aware that at least some of the major banks, if not all by now, have reduced their interest rates on pensioner deeming accounts to 0.25 per cent below the deeming rates used by Centrelink?

I have tried to get politicians on both sides interested in this, but I am finding that my messages are not being returned, and when I get to speak to a staffer, there is very little interest – the setting of Centrelink deeming rates has apparently had bi-partisan support.

I wonder how many pensioners are actually aware of this matter.

A. Many of our members will be more than aware of the negative affect interest rates (that are lower than deeming rates) have on their overall financial position.

You are indeed correct when you say that the setting of deeming rates by the Government is done so with the support of the Opposition, so forcing any change will be unlikely.

It’s important to note that the purpose of deeming rates is to average the earnings from investment so that you do not need to supply detailed information and paperwork to Centrelink in order to claim an Age Pension. Such paperwork would slow down the process of assessing Age Pension eligibility and determining how much Age Pension should be paid.

It is also worth noting that deeming rates are not only designed to take into consideration income from saving accounts and term deposits, but also income from all investments, such as shares, account-based income stream and managed investments. Many of these investments mean you actually get a return greater than the rate of deeming.

The current deeming rates from March 2015 are:

Family Situation

Assets Threshold

Rate of Deemed Income

Single

$0 – $48,000

1.75%

Above $48,000

3.25%

Allowee Couple - per person (1)

$0 – $39,800

1.75%

Above $39,800

3.25%

Pensioner Couple - combined (2)

$0 – $79,600

1.75%

Above $79,600

3.25%

Do you agree with Brian? Should more be done to help those who rely on savings accounts and term deposits? Or are deeming rates the fairest way to assess multiple income streams without having to submit complex and detailed paperwork?

RELATED ARTICLES





    COMMENTS

    To make a comment, please register or login
    Bonny
    18th Apr 2016
    10:13am
    Centrelink do not want pensioners just to invest in these accounts for the simple fact that it is not the best thing to do. Investing in these accounts is not a good investment as most years your money goes backwards due to inflation and tax.
    maelcolium
    18th Apr 2016
    10:19am
    Did you dream that one up Bonny?

    Centrelink don't care what you invest in.

    However, by setting deeming rates higher than term deposits people may choose risky investments which could see them lose their principal.

    Now that's going backwards.
    Bonny
    18th Apr 2016
    10:37am
    That's what Justin Bolt the face of Centrelink told me so I didn't dream that one up.

    Term deposits are risky investments as they lose value every year which is the same as losing your principal.Personally I'd rather have an investment that rises over time than one that goes backwards every year. Makes a lot more sense to me.
    Robin7
    18th Apr 2016
    10:43am
    Government don't want you to Self Manage your super at all - How are their big mates going to get a cut of your cash if you self manage??

    Have some heart people, Self Managing is just not fair to starving multi-billionaires!
    (who contribute hundreds of thousands of dollars to the political parties, in case you wonder why the pollies do such stupid things)

    And if you need more "proof" go look at the fiasco of Trio Capital's fraud and the denial of compensation for the SMSF's that got destroyed.
    HarrysOpinion
    18th Apr 2016
    1:06pm
    Term deposits lose value? Same as losing your principal? Bonny is off her head! She doesn't understand what Term deposit is all about!
    Scrivener
    18th Apr 2016
    1:07pm
    How did you get to figure out what Centrelink thinks. Bonny? Centrelink has no power whatever to determine what you invest in and they are unable to impose incentives, dis-incentives or constraints on a person's investments. If I am incorrect then please direct me to the legislation that confirms you assertions.
    Bonny
    18th Apr 2016
    1:22pm
    Centrelink doesn't care where you invest but they set their deeming rates higher than deposits so that pensioners don't just leave it in the bank and earn low interest. It is an incentive have their money work for them.

    Yes term deposits lose value. $500,000 in a term deposit today will be lucky to worth $500,000 in a term deposit in 20 years time. Even at a very modest return of say 5% after tax and inflation you money will double in 14.4 years and let's be conservative and say it is only worth 2 times say $1 million in 20 years. You have thus lost $500,000. That to me is losing serious money.
    Retired Knowall
    18th Apr 2016
    2:25pm
    Deeming rates are set by the Minister for Social Services. Minister Christian Porter is responsible for: Overall responsibility for the Social Services portfolio.

    Deeming exemptions are granted to financial investments under special circumstances. Examples include:
    -when a financial investment has failed
    -some superannuation investments where funds are fully preserved or inaccessible
    -an account that only contains funds paid to participants for a funded package of support through the National Disability Insurance Scheme.
    Centrelink sits under the control of the Department of Human Services or DHS. The current Minister is the Hon. Alan Tudge
    HarrysOpinion
    18th Apr 2016
    4:26pm
    Bonny, The value of the dollar depreciates (rule of thumb) by 10% pa. So, one needs to find an investment return of more than 10% pa to be on top of it. Based on the rule of thumb of depreciation of the dollar, your $500,000 today, after 20 years time, if it was kept under the mattress as cash will be worth in the future, $60,788.33 which is equivalent to the $500,000 today. If invested at 5% over 20 years it will have a future value of $1,326,648.85. If invested over 20 years at 2.8% it will have a future value of $868,624.95 If invested at 2.8% pa with an annual deposit of $5,000 pa it will have a future value of $1,003,962.96. There are no Term Deposits that offer a a 20 year term, in general the max is 5 years, in some rare cases it may be 7 years.
    Bonny
    18th Apr 2016
    4:46pm
    Inflation is your enemy where a dollar today is usually worth more than a dollar tomorrow. I hope inflation is not 10% pa as those with term deposits are in big trouble.
    OlderandWiser
    18th Apr 2016
    6:04pm
    Precisely why the changed assets test is stupid. It takes no account of age or future earning capacity or needs, so it will force many into hardship and many more onto pensions whereas they could, with just a small part pension, remained close to self-supporting and even, in some cases, potentially move gradually to being self-supporting.

    The stupid change provides a powerful incentive to put money under the mattress, because you will be paid 7.8% for doing so, whereas in the bank the money loses value and even at 5% it will reduce in value given that you have to live on that 5% and can't reinvest it. A couple with $750,000 in returning assets would need to achieve 5% return to be as well of as a full pensioner, and at least 8% return to have a hope of keeping up with inflation. The alternative is to drain their capital and then claim a pension, which will drive total aged pension costs through the roof in future years.

    If your return rate is less than 7.8%, you are better off putting your money under the mattress. If Centrelink or the Minister want to either encourage spending or wise investment, they are going a very stupid way about it.
    Rae
    19th Apr 2016
    2:23pm
    All very well but we have been in a deflationary cycle for seven years now and there is nothing on the horizon suggesting that will change.

    Investment funds have returned because of currency declines boosting international investments and the property bubble. The Aussie sharemarket hasn't gone anywhere much in ten years.

    I love the nonsense of people quoting 8% and 10% returns. Have a look at the real rate of returns over the past 50 years. Much more realistic and then add the deflation that will grind on during The Great Recession we didn't need to have.

    Rainey is quite correct. Emergency savings for living, holidays, dining out etc would be best kept in safe storage, and the return of not saving, in the fortnightly government payment plus discounts and health card far out way any returns on equity available in the current market unless luck enough to have bought Sydney real estate and sold it recently. Or bought international assets with the high dollar and cashed them in to pick up the 30%+ currency bonus.

    Even then the aged pension discounts and health benefits make a mockery of saving for retirement. Paying $132 for a script while the guy beside you pays $5.80 is a kick in the head experience for the hard working self funded saver.

    I fully understand Packer's argument about taxes now as a tax payer who has received no reward ever for diligent working and tax paying. I will minimise as far as I can in future.
    Bubbles
    18th Apr 2016
    10:17am
    Yes I agree the Centrelink deeming rates do not reflect the current bank interest rates. I have also mentioned this to a Centrelink worker who agreed with me, but the powers that be are still living in la la land!!!
    Bonny
    18th Apr 2016
    10:49am
    The deeming rates have nothing to do with bank interest rates but are set by the government as a short cut way of assessing all investments.
    PlanB
    19th Apr 2016
    4:27pm
    If the deeming rates at the bank are not the same OR BETTER than what the Government says you are getting -- then that is pretty poor as it could mean quite a lot of difference in your yearly income.
    Fliss
    19th Apr 2016
    10:19pm
    Very valid point Bubbles.
    And the comment below yours about deeming rates having nothing to do with bank interest is such crap. Of course they do.
    Why do deeming rates go up & down in line with RBA rates??
    Of course deeming rates have LOTS to do with interest rates!!!!
    Jolly
    18th Apr 2016
    11:52am
    Does anybody on this site have an Annuity. If you do can you please share your thoughts and comments.
    sidney70
    18th Apr 2016
    4:31pm
    Hi Jolly
    I have a Annuity with Bridges. It is the best way to go. You are not going to get rich but your money is managed by a professional team. It is not counted by the taxation department and Centrelink doesn't count it as an Assett. The only thing Centrelink wants to know is how much you earn from the Annuity per year.
    Jolly
    18th Apr 2016
    6:46pm
    Thanks Sydney70. I have been looking for a while and maybe my key to retirement.
    sidney70
    18th Apr 2016
    9:20pm
    Hi Jolly
    You are welcome. Go and have a talk to Bridges. They will look after you.
    sidney70
    18th Apr 2016
    9:23pm
    I have been with Bridges for about 12 years and although I did not get rich I have no complaints.
    Retired Knowall
    19th Apr 2016
    7:39pm
    It depends on when you take out the annuity and the interest rate at the time.
    If you took out the annuity when the interest rate was around 11 to 12% you would be pretty well off now with interest rates as low as they are. If you now take out an annuity when interest rates are at record lows, you will lock yourself in to very poor rates for the term of the annuity.
    Look at the rates they are offering, the term of the annuity and what happens to the residual when you die.
    Personally, I believe you can do much better with and Industry Super Pension account. Look up CHANT to get and idea of what's on offer.
    Mystic
    18th Apr 2016
    12:31pm
    The second scale of deeming rate at 3.25% is above the interest rate received from Term Deposits, and they still find a way to tax self funded retirees at the higher rate.
    Bonny
    18th Apr 2016
    12:34pm
    I can't see that the deeming rate has anything to do with taxation. What have I missed?
    Rosret
    18th Apr 2016
    12:41pm
    YES! I don't understand either. I think we have been forgotten - i.e. look after yourself kiddo, you've done a good job so far and we need people like you to support all the other who haven't. - Very unfair.
    HarrysOpinion
    18th Apr 2016
    3:42pm
    Bonny, I think you missed your appointment in Macquarie Street.
    Bonny
    18th Apr 2016
    3:52pm
    Yes I guess I did and they can come and get me instead. Was in Sydney on Australia Day but before that must be a good 20 years since I was last there. No desire to go back again any time soon.

    18th Apr 2016
    12:35pm
    I am certainly not as incensed about deeming rates to the extent Brian is, as that does nothing but heighten your blood pressure. I DO think that the government is deliberately playing with itself (and our Aged Pension) with this overly inflated rate. What should be done is an adjustment made to the deeming rate every time the Reserve Bank makes an adjustment to the interest rates. This is only common sense and that is totally devoid from government thinking, except when it comes to their own pay, associated position benefits, government pension, car allowance, travel, etc, etc, etc.
    petes2506
    18th Apr 2016
    12:36pm
    Centrelink are always telling us on the TV that they cross reference everything so I don't see why it's necessary to actually tell them anything
    HarrysOpinion
    18th Apr 2016
    1:23pm
    petes2506 If you are on a pension it's you duty to self-report any change in your circumstances such as gross Income from casual, part-time or full time employment. Any change to your financial position of $2,000 or more (savings, investments) and any change to your Assets such as Real Estate investments, furniture, car motor bike
    ( appreciated and depreciated value) etc, within 14 days of the change that has occurred. If you are registered online with MyGov and access to Centrelink you can easily update the changes or do it in person by phone or at the branch.. Currently you don't have to declare the value of your home that you reside in but, this could very well change soon and it may be mandatory.
    Scrivener
    19th Apr 2016
    2:55pm
    Why can't Centrelink explain things as clearly as HS? Their web site is a disaster. If they were Apple or Google it would be intelligible though. Surely they can hire someone who understands how to communicate.
    OlderandWiser
    19th Apr 2016
    9:52pm
    Why can't Centrelink ACT on advice of changed circumstances. You are obliged to report, but when you do they simply ignore your advice!
    Adrianus
    22nd Apr 2016
    4:58pm
    Just a word of warning. There are people in gaol for not reporting changed circumstances.
    Rosret
    18th Apr 2016
    12:39pm
    Call me an ignoramus but can someone explain this too me. On retirement it is necessary to set up a deeming account so that's where your superfunds will be deposited. When you begin is 4% of your super per year and then it increases as you age. Now I did that haven't drawn down on the super yet. The bank then warned me that I may not be entitled to the deeming rate. So what I thought was earning interest may not be. I seriously don't understand. No income, no government handouts - no deeming rate. How is that fair?
    Bonny
    18th Apr 2016
    12:50pm
    Banks have pensioner accounts which have an interest structure very similar to the deeming rate structure but the interest rates of the account may be less than or higher than the actual deeming rates.

    Centrelink set deeming rates whereas banks set interest rates that are independent of centrelink rates.

    I suggest you look up the details of your particular account to find out what interest rates you are getting paid.
    Retired Knowall
    18th Apr 2016
    2:31pm
    Centrelink DO NOT SET DEEMING RATES.
    They use the rate that is set by the Minister for Social Services.
    Centrelink sits under the control of the Minister for Human Services.
    HarrysOpinion
    18th Apr 2016
    3:16pm
    That is so true Retired Knowall.
    Bonny
    18th Apr 2016
    3:56pm
    The banks certainly don't set deeming rates or take any notice of them either.
    HarrysOpinion
    18th Apr 2016
    4:42pm
    Bonny, you contradicted yourself in this comment to your previous comment. OF COURSE!, banks take notice of the deeming rates as much as the Centrelink and the Minister for Social Services takes notice of the bank's interest rates.
    Fliss
    19th Apr 2016
    10:26pm
    Hey "Retired Knowall", how come you chose that name for yourself ;) - from reading here, it looks to me like this "Bonny" person wants to be called that - "Knowall" I mean . . . .
    p.s. she's not doing a very good job of it though - saying "Centrelink set deeming rates whereas banks set interest rates that are independent of centrelink rates".
    What a load of crap she speaks!!!!!
    OlderandWiser
    18th Apr 2016
    12:45pm
    Never mind deeming rates. The assets test effectively enforces a deeming rate of a massive 7.8%. Hard to get that kind of return across your entire assets base without taking far too much risk for comfort.
    Bonny
    18th Apr 2016
    12:52pm
    Deeming rates are only applicable to the income test and have nothing to do with the asset test. So not too sure where you get your 7.8%.
    OlderandWiser
    18th Apr 2016
    12:56pm
    Obviously you are not as smart as you would like us to believe, Bonny. $78 per year pension reduction for every $1000 you hold in assets above a very moderate threshold is equivalent to applying a 7.8% deeming rate. You would have to get 7.8% net return on that $1000 to not suffer a loss.

    Now wonder you defended the assets test changes. You don't have even the most basic understanding of their grossly unfair and damaging impact. There is a massive incentive for retirees who have modest savings to reduce their assets and gain a much higher income.
    Bonny
    18th Apr 2016
    1:08pm
    Disagree that has nothing to do with the deeming rates.

    Yes I agree with the asset test changes as it is simply unfair that a couple with over $1 million can get the aged pension. The house also needs to be included in the assets test as this is the most inequitable part of the age pension.

    I think it is a good idea that retirees reduce their savings to gain a much higher income as it will help stimulate the economy. That is my basic understanding of how it should work.
    OlderandWiser
    18th Apr 2016
    1:22pm
    A rose by any other name is still a rose, Bonny. Of course the assets test effectively applies a deeming rate of 7.8%. And it applies it to people who have less than $1 million in assets, but $1 million is not much for a 65-year-old couple who may be facing 30+ years of inflation and increasing health and care costs.

    The suggestion that retirees should spend now to stimulate the economy is ridiculous. Then there will be far more people drawing far higher pensions. The government claims to be concerned about pension costs rising over time as the number of retirees increases. (The cost of pensions at present is NOT excessive!). Therefore, they should NOT be encouraging people to spend their savings, and discouraging younger folk from savings.

    As for stimulating the economy - what rubbish. Most pensioners caught by the assets test change will spend overseas, or else upgrade their family home and thus add to the housing cost problem.

    Clearly, we are governed by idiots.
    HarrysOpinion
    18th Apr 2016
    1:36pm
    Income and Assets

    About this service
    Before you update
    Date of change
    Authorising permission to enquire
    Saving and resuming your updates
    Negative values when updating
    What is income?
    What is an asset?
    Annuities and Superannuation Pensions
    Real Estate and Business

    This includes any real estate or businesses you (or your partner, if applicable) own in full or in part. If any real estate is listed with a business, then that real estate is included with the business details.

    Your home is generally not included in the Centrelink assets test when you are living in it and not using any part for business only. Land on more than one title or in excess of 2 hectares may be counted as an asset.

    Please see Foreign Income and Assets for information about real estate and businesses outside Australia that are not listed here.

    What you may need to update real estates

    Documents confirming sale transfer or purchase of a property such as solicitor’s letters transfer documents.
    Copies of latest council rate/valuation notice.
    Mortgage or loan agreements for any loan/s secured against your property/s.
    If water licence or rights held, documents showing details of each water licence
    Copy of latest income tax return, rental profit/loss statement and depreciation schedule for a rented property

    Maintaining the value of real estate assets

    The Department of Human Services may arrange a valuation of your real estate at no cost to you. This can be different to the valuations used by state and local governments, which do not generally reflect the current market value of the property and buildings. We will apply an indexation amount annually to the value of your real estate to keep the value current, and to ensure you are receiving the correct entitlement.

    Real Estate

    Real estate assets include all property types, owned by you and or your partner, regardless of whether you rent it out. The principal home and allowable curtilage is not included as an assessable asset.

    Event on a property or real estate

    An occurrence that may significantly affect the value of a property. The occurrence could either potentially increase or reduce the value.

    Examples of events that may increase the value are:

    adding an extension to the property or
    the local Council changing the zones title of a property to allow subdivision
    Examples of events that may reduce the value of a property could be a house fire or a flooding event.
    Indexation Date

    The Department of Human Services applies an indexation amount annually to the value of your real estate to keep the value current, and to ensure that you are receiving the correct entitlement. The indexation rate reflects fluctuations in the relevant real estate market.

    Sold or Gifted for less than market value

    This is a situation where the amount you received is less than the current market value. The current market value at the time of sale may not be the amount currently shown on your record.

    Circumstances affecting the value of the property

    This may include details such as: no water on property for grazing livestock, lack of adequate fencing, hills, rocky ground, natural bushland, unusual title.

    Curtilage

    The value of your principal home and surrounding land (up to 2 hectares) is not considered an asset under the assets test. To be exempt from the assets test, your principal home and adjacent land, up to 2 hectares, must be on a single title block and the land must not be used primarily for commercial purposes. Any additional property or part of your own principal home, over 2 hectares will be assessed as part of the assets test. In some circumstances all of the land on the same title as the principal home may be exempt from the assets test .


    Authorise_inspections

    Purpose of this authority
    To enable us to correctly assess your entitlement, it may be necessary for a valuation of the property to be completed.
    In order to continue paying your correct entitlement, we may arrange to have the property professionally valued from time to time, at no cost to you.
    Why is a valuation required?
    The social security law requires that the value of assets (e.g. property, shares in a company, and units in a trust) is included when calculating the amount of pension, benefit or allowance payable.

    How is the value of a property decided?
    The value of real estate is its current market value, less any allowable debts on the property. The ‘current market value’ is the price the owner could expect to receive if the property was sold. Through regular updates using relevant market data the Department of Human Services will maintain the value of the property.

    What happens if there is no permission to inspect the property?
    If the value of the property is likely to affect a person’s entitlement to social security payments or the rate of payment, but no permission to inspect the property is provided, the person’s payment may not be granted or payment may be stopped.

    What if you are not satisfied with the valuation?
    If you are unhappy with a valuation, you should contact us. We will check the details, explain the decision, and if necessary arrange a further valuation. This gives you a chance to correct misunderstandings or present new information. If you disagree with the decision and would like the decision to be reviewed, we will forward the matter to a review officer. For more information about your review and appeal rights, or to request a review of a decision, go to our website humanservices.gov.au or call us on 132 300 or visit one of our Service Centres.

    Assessed Asset

    This amount is derived using real estate value, house contents other related assets, livestock, mortgage/loan balance and current house and curtilage values. Assed value is the net amount.

    Assessable Income

    The assessable income from your property is the gross income less any allowable deductions.

    Allowable Deductions

    Allowable deductions include business and primary production expenses or rental property expenses such as rates, insurance and repair. Mortgage interest from your property will be captured in a separate question.

    Rental Income

    This is the gross amount of rent received (before tax and other deductions).

    Property Income

    Gross income from property includes, rental income, primary production or other income received for the property.

    Market Value

    The current market value is what you would get if you sold it the asset. It is not the replacement or insured value.

    Estimate of value of households items

    The market value of household contents and personal effects is what you would get if sold. It is not the replacement/ insured value. Include furniture, electrical appliances, art work, curtains, etc.

    Encumbrance

    An encumbrance is a right to, interest in, or legal liability on property that does not prohibit passing title to the property but diminishes its value.

    Mortgage

    Generally, the amount of any debt secured against the particular real estate asset is deducted from the value of that asset.

    Title deed/document

    A title document provides details of the property’s address, description, size and ownership.

    Water Licence

    A Water Licence specifies where you are allowed to take water. This includes any river, stream, creek or in-stream dam within your property boundary that connects to other watercourses in the catchment.

    Water Allocation

    A Water Allocation states how much water can be taken in a given time period. Water Allocations relate to the area that the water is able to be taken from, the area the water is to be used on or the specific purpose for which the water may be used.

    Loan Agreement

    A loan agreement documents the details of the loan, with specifics such as the amount borrowed and what the funds were borrowed against.

    Depreciation Schedule

    Depreciation is a term used to describe the reduction in the value of an asset over time. Depreciation schedules will state how the value has decreased over time (since purchase).
    OlderandWiser
    18th Apr 2016
    1:37pm
    BTW. Bonny, the 7.8% effective ''deeming'' rate cuts in at just $250,000 for a single homeowner and $375,000 for a homeowner couple, so your $1 million figure is irrelevant crap.

    The fact is that anyone with modest savings is being punished by a loss of 7.8% on every $1000 they save. given that many probably earn only 2% on some of that money, the government is punishing savers by ''fining'' them 5.8% on every dollar saved over a miserably low limit. Pretty stupid given the Treasurer's urging people to save and invest for retirement so pension costs fall!

    Also grossly unfair, stealing the savings of people who worked hard and went without to try to ensure a decent standard of living in old age, and forcing them into a hardship they do not deserve.
    HarrysOpinion
    18th Apr 2016
    1:46pm
    Social Security Assets Test – rebalance assets test thresholds and taper rate From 1 January 2017 the assets test free area and the assets taper rate will increase.
    The assets test free area is the amount of assets above which allowances are not paid and pensions are reduced.
    The assets test free areas will increase to:
    $250,000 for a single homeowner $375,000 for a homeowner couple $450,000 for a single non­homeowner $575,000 for a non­homeowner couple
    Pensioners will be subject to a new taper rate of $3 for every $1,000 above the new assets test free areas.
    Income support recipients who lose their payment entitlement on 1 January 2017 as a result of the changes will be automatically issued with a Commonwealth Seniors Health Card, or a Health Care Card for those under age pension age. They will be exempt from the usual income test requirements for these cards indefinitely.
    All pensioners who are assets tested will be affected by the changes from 1 January 2017.
    From 1 January 2017, customers receiving or applying for an allowance will have a higher assets threshold.
    This measure will also affect the means test assessment for aged care fee purposes.
    Who is eligible for this measure? All pensioners who are assets tested will be affected by the changes.
    This measure will start on 1 January 2017.
    This information was printed Tuesday 5 April 2016
    From 1 January 2017, customers receiving or applying for an allowance will have a higher assets threshold, meaning more people will qualify for an allowance.
    This measure will start on 1 January 2017 and is ongoing.
    Kactus
    18th Apr 2016
    2:59pm
    HS

    "Income support recipients who lose their payment entitlement on 1 January 2017 as a result of the changes will be automatically issued with a Commonwealth Seniors Health Card"

    My father recently lost his part pension and his CSHC as well.
    All attempts to extract a reason from Centrelink, as to why, have been unsuccessful.
    Being 88, you can imagine how distressing this has been for him.
    Centrelink are becoming notorious for their obsfuscation & reluctance to explain their actions.
    HarrysOpinion
    18th Apr 2016
    3:25pm
    Kactus,

    The Commonwealth Seniors Health Card is subject to an income test which is indexed on 20 September each year and includes:

    adjusted taxable income, and
    a deemed amount from account based income streams
    There is no assets test.

    You should have an annual income of less than:

    $52,273 for singles
    $83,636 for couples combined, or
    $104,546 for couples combined, who are separated by illness or respite care, or where one partner is in prison
    The income limit is increased by $639.60 for each dependent child you care for.

    https://www.humanservices.gov.au/customer/services/centrelink/commonwealth-seniors-health-card

    If you have a problem with Centrelink staff then write a letter to the Commissioner of Human Services requesting a written clarification regarding the subject of your concern and / or lodge an official written appeal against the decision with Centrelink, without complaining about the staff’s attitude or misinformation.
    HarrysOpinion
    18th Apr 2016
    3:48pm
    Rainey, "The assets test effectively enforces a deeming rate of a massive 7.8%" I believe the expression is "taper rate" on Assets Test. Deeming rates apply only to the Income Test.
    Bonny
    18th Apr 2016
    3:59pm
    Age pension alone now accounts for 10% of the tax revenue paid and is rising. That is a big problem and is not sustainable.
    OlderandWiser
    18th Apr 2016
    6:12pm
    HS, it matters not what you call it. The point is that it has the same effect.

    Bonny, the Age Pension costs approx. 3% of GDP at present, and is not expected to rise about 4% of GDP by 2050, so it's NOT a major problem at all. But if it were true that it were such a problem, that would certainly prove my point - that driving it UP UP UP by measures that punish savers and reward people for being less responsible are DUMB AND ECONOMICALLY DESTRUCTIVE.
    OlderandWiser
    18th Apr 2016
    6:40pm
    I might add that the CSHC is almost worthless by comparison with a Pensioner Benefit Card. Many specialists reject the CSHC but bulk bill pensioners. It doesn't entitle you to registration discounts, rates discounts, free license, and many other benefits. Honestly, anyone with just over the new assets threshold is going to be seriously disadvantaged financially by having saved a little.
    Bonny
    18th Apr 2016
    7:06pm
    GDP has nothing to do with the tax revenue received by the government so I really can't see that it is of any significance. The problem is that it is taking up 10% and rising of the tax revenue which cannot them be spent on other government expenditure.

    What about those savers who now are above the present asset threshold? I doubt they would of not saved. No one is being punished but those who don't need welfare are no longer going to get it. As I have said many times a couple with over $1 million in assets does not need the pension. They also don't need the benefits that go with the pension as they can afford to pay for them.

    So if you have just a few assets over the new threshold then it won't take you long to spend them down as you are no longer getting welfare from the taxpayer so will soon get the pension again.
    OlderandWiser
    18th Apr 2016
    8:27pm
    Bonny, the message now is ''We'll REWARD you with a return of 7.8% indexed to inflation PLUS generous pension benefits if you DO NOT SAVE. If you DO save, you will suffer a loss of $78 per $1000 saved over a low threshold, PLUS the loss of benefits.

    How in the hell can ANYBODY be STUPID enough to think that will encourage saving?

    And if it doesn't take long to spend down to get the pension again, then we are NOT going to cut costs to the taxpayer by encouraging spending (or hiding money, or gifting 5 years before retirement, or sinking it into an expensive home).

    You are proving conclusively how DUMB the change is. You are verifying that it CANNOT save money. It MUST drive costs up.

    And of course the saver is being punished - deprived of income they need and in many cases left with far less income than a pensioner. How is that NOT punishment? As for need, what a load of BS!

    So the high income earner who lived it up is ''NEEDY'' but the low income earner who was frugal isn't? The guy who gave $1 million to his kids at age 60 is needy, but the guy who put his $1 million into super isn't? The underprivileged guy who fears risk and doesn't understand investment, but saved $500,000 and banked it at 2% interest is less needy than the privileged guy who is getting 8% on $300,000?

    The guy with $750,000 invested and huge health costs and special care costs is NOT needy, but the guy with $375,000 invested and NO health costs and the ability to do his own home maintenance is? The guy whose $750K has to last another maybe 30 years with no earning is NOT needy, but the 90 year old with $350,000 and only about a year to live is?

    Anyone who thinks this is prioritizing pensions for the needy is brainless!

    'The current system has NOTHING AT ALL to do with NEED. It's total crap devised by brain-dead idiots who are happily plunging the nation further and further into debt with their stupid short-sighted, unfair, and socially and economically disastrous policies.
    MICK
    18th Apr 2016
    1:18pm
    You'd be hard pressed to get 3.25% pa at the moment. Especially across the board. Retirees really have been dudded.
    The big end of town mostly has it's own investments and will not be concerned about deeming rates. That is why they have not come down. Ordinary citizens are canon fodder. Nothing more.
    OlderandWiser
    18th Apr 2016
    1:25pm
    You got that right, Mick. I just saw a renewal notice for a term deposit for an elderly lady I hold Power of Attorney for. The interest for the last 4 months was $611.67. For the next four months, it's $314.19. Almost halved, in such a short time.

    This government is a disgrace. And the future for older Australians looks extremely bleak if we don't oust them. (Not sure that it's any less bleak regardless of who is in power, sadly!)
    Retired Knowall
    18th Apr 2016
    2:43pm
    I'm a self funded ordinary citizen earning over 8% on my share portfolio, average 5.6 % on my super account and just under 4% on my rentals. Maybe you hang around with the wrong crowd.
    HarrysOpinion
    18th Apr 2016
    3:32pm
    That's good for you Retired Knowall. Nice to hear. However, if you invested in rental property in some regional areas you may get a 7-8% gross return on your rentals.
    Retired Knowall
    18th Apr 2016
    4:21pm
    Spot on HS, it's all about Location, Location, Location.
    OlderandWiser
    18th Apr 2016
    6:15pm
    You are what's wrong with the nation, Retired Knowall. Just because you can achieve a given return, you deem it acceptable for the government to work on that return and ignore the majority and the average. And besides, you are still NOT achieving the return achievable by shedding assets and claiming the pension - 7.8% across the board indexed to inflation.

    You have proved my point! The changed assets test is fundamentally flawed, rewarding people for shedding assets and punishing savers.
    Bonny
    18th Apr 2016
    7:15pm
    Rainey Retired Knowall has a perfectly good strategy and one that people investing in lazy assets should be having a good look at. Banks love people investing in lazy assets because they then do what the person should have done with those assets themselves. These same people then complain about banks making huge profits.

    Percentages can be very misleading because they can be worked out in many ways. An example being that if someone bought house years ago for $100,000 and working out today's rent return on that figure would give a big return whereas if they worked it out on today's market value the return could be quite low.
    OlderandWiser
    18th Apr 2016
    8:39pm
    Bonny, the whole point that the privileged DON'T GET (or are too arrogant to want to get) is that vast numbers who AREN''T privileged DO NOT HAVE ACCESS to those investment strategies. They don't understand investment. They fear risk. They don't know where to find honest, reliable advisers (and such advisers are few and far between - whereas rip-off merchants are everywhere). So you and Retired Knowall support a strategy of ''bash the less privileged'', while purporting to support ''pensions for the needy''. You don't actually support ''pensions for the needy''. What you really support is ''pensions for the dishonest greedy'' and ''a good deal for the privileged'' and screw everyone else - and blame the victim for the hurt they suffer.

    The system favours the dishonest, the conniving, and the well-to-do. It looks after the poorest minimally. And it shafts everyone who got off to a poor start in life (due to losing in the lottery of birth) but worked their guts out to try to elevate their status a little, but didn't quite make it (for whatever reason) to the approx. $1.5million (or very high return rate) needed to be truly self-sufficient.

    Frankly, this ''I'm alright Jack and screw you'' attitude is vile and sickening. It's what's wrong with Australia today. This used to be a nation where mateship and a fair go were valued. No more! Now it's me, me, me, me, me and stuff anyone who isn't getting a fair go - as long as I'm okay and can boast and gloat.
    Retired Knowall
    19th Apr 2016
    2:24pm
    If I'm what's wrong with this country there should be more of it.
    I have most of my assets away from the Govt. hands. they can lower the threshold all they like, they can abolish Negative Gearing as my rentals are all Positively Geared. I'm self funded because I saved and invested my savings prudently. I believe the government should tax the earnings in my Super account because I feel a little guilty getting over $80K tax free, but then again when I read the dribble you post and the "Poor Me" comments I don't feel so bad. My shareholdings are the result of years of study in the financial structures in Australia and I put myself through the Financial Planners Diploma at Deakin Uni. My dividends are mostly in Australian Shares and I enjoy Franking Credits.
    I Don't and Hopefully never will have to rely on the Battling Worker to fund my life style.
    Have a good life.
    OlderandWiser
    21st Apr 2016
    9:25am
    Retired Knowall, I agree it would be very nice for more people to be able to achieve what you have. Unfortunately, not all were born to circumstances that enable them to. Illness, lack of education, abuse in childhood that creates psychological barriers, sick or disabled children and a range of other challenges often mean very low earning power and limited capacity to understand investment - let alone to have any thing much to invest.

    Your arrogance and lack of empathy is sickening. It is not a case of ''poor me'' or ''dribble''. I've done very well considering the challenges I faced. I've achieved far more than the majority, and had investment returns not crashed across the board, I'd be very comfortable today. I am very happy, contrary to your BS assumptions.

    But it's not about you or me, Retired Knowall. If you did, in fact, know all, you'd know that many people simply never got the opportunities you enjoyed. Years of study? Good for you. I wish I'd had the opportunity to study, instead of working 80 hours a week to pay medical bills for a special needs child and support a partner who suffered sickness and disability due to institutional abuse in childhood and then workplace accidents for which compensation was not paid due to legal but very immoral manipulation. I wish my partner could have gained entry to ANY university course, but after the deprivation and abuse suffered, and abuse of power by government bureaucrats to deny entitlements, there was no hope.

    I am very happy with my lot overall, and better off than many, but I will stand up for the rights of the majority. I am disgusted at the arrogance and selfishness of the ''I'm all right Jack, stuff you'' brigade. I'm disgusted that the narcissists and egotists here won't protest injustice and unfairness.

    Retired Knowall, you should be deeply ashamed of your contempt for others, but I think you are too much of a narcissist.

    Selfishness is what's destroyed this nation, and you are a classic example of it. Yes, there should be more affluent retirees, through better community support, better education programs, better policing of financial advisers and banks, better compensation for injustice that caused suffering, and fairer taxation to fund the kind of programs that enable people to improve their lot. Ultimately, we should have very few people on an aged pension, because there should be programs in place to ensure that most are able to achieve financial independence, but those in power don't want general prosperity. Like you, they want to be able to beat their chests and claim superiority and entitlement, and look down on and insult others. What a sick way to live!
    Herbie49
    18th Apr 2016
    1:25pm
    I retired at 66 in July last year, and applied for a pension ( assumed I would get a part pension ) I was unable to provide all the required information to Centrelink as I had on sold my small business and was waiting for taxation etc. in January this year I applied again and eventually hear back in March, pension disallowed as to much income.
    I was not expecting to get much so accepted the decision, I was reading an article in here a couple of weeks ago which got me thinking so had a look at the Centrelink letter, it advised me that my income (including my wife's who still,works part time ) was $54.000.
    I had a look at the pension info on Centrelink page regarding the cut off points which is approx $2900 per fortnight which equals approx $75.000 per year?
    I went down and saw a Lady who explained that I was also being deemed approx $24.000 , so I was over the cut of limit. I had not really understood this demoing issue and asked for it to be explained, ok I like a few others I suspect must be a slow learner.
    We have a family trust which was set up about eleven years ago and bought a small factory unit to carry out my business ( paying a mortgage was cheaper than renting ) we receive $24.000 gross rental income on the unit which is declared on my income tax and to Centrelink.
    I was dumbfounded when Centrelink told me that as we had loaned ? The money to the family trust, it owed us that money and should be paying us interest on the loan. They also told me I as deemed on my super, it did not matter that my fund had lost about $7000 in the year, with an " oh I am sure you have made money over the years" maybe but I had not applied for a pension over those years!
    I was advised to talk to my accountant and have the family trust pay interest back to us on the loan value, which would leave a small amount to be declared to Centrelink, thus reducing my income by approx $20.000 per year. I still can't get my head around this as it is the same dollar value in total income. Centrelink said they are not interested in interest paid by the trust ( but the tax dept will be ) I asked then why do they want to know how much interest I get on my bank balance etc. I have talked to my accountant who is changing things around, and I will go see Centrelink again.
    Apologies for the waffle, but can anyone enlighten me further, it may have helped if they had explained the whole breakdown including deeming etc on their letter rather than quoting the income I had submitted originally?
    Bonny
    18th Apr 2016
    4:13pm
    Put simply it doesn't matter what income you earn from your assets Centrelink simply use the deeming percentage rate of those assets to work out your "income".

    At 66 you have reached retirement age so they can also deem the value of your super.

    Hope that helps but a good accountant with all your information should be able to help sort it out.
    Appathetic
    18th Apr 2016
    4:22pm
    Common problem with small businesses and trusts where 'loans' over many years have been used to minimise taxation. If there is no chance of the loan being re-paid then a simple statement to that effect can by provided by your accountant and the amount can be written off and 'removed' from your assets. Be careful how this is presented as it may be treated as deprived income.
    Retired Knowall
    18th Apr 2016
    4:36pm
    If you were retired before 31/12/2014 and took out a Super pension account before 1/1/2015 the income from that account is not counted towards the income test. All Super accounts started from 1/1/2015 have the income from Super accounts treated as income for the Income test. All pre-2015 accounts are grandfathered until a person changes their account, then the new rules apply.
    Jim
    18th Apr 2016
    3:47pm
    Like many people I am risk averse, so I have always invested in low risk investment eg term deposits, when the interest available on term deposit reduced to below 3% I did a few calculations and realised that with the deeming rate at 3% for the majority of my money, I decided to withdraw all of my money from my super and put it in the bank, the biggest saving for me was that I do not pay the 15% earning tax in super and I do not have to pay an advisor to manage my account or the fund managers for investing my money, I have calculated that I am getting the equivalent of 1.5% more than 3% deeming rate, not sure I have explained it very well, but what I mean is that I would have to earn 4.8% to get the same return after taking out all the fees and taxes. Remember once you take your super out you can't put it back in again, so obviously what Iv'e done will not appeal to everyone.
    OlderandWiser
    18th Apr 2016
    9:53pm
    I've come to the conclusion that the government wants most retirees to be poor, and has shaped policy accordingly. Of course, the rich will always be okay, and the government will leave them well alone to enjoy their wealth. But if you are not wealthy - or somehow able to get well above average returns - you had better be poor, or the policies will ensure that you continue to become poorer. Deeming rates higher than interest rates, taper rates triple interest rates (and much higher than even the government says is an average return at present)... all appear designed to push responsible battlers who tried to save down until their savings are gone and they qualify for a full pension. And this is what some suggest will SAVE the taxpayer money! Yeah, right! Make retirees poorer so there are more of them on full pensions and that's supposed to result in government savings.

    This pretence of ''pensions for the needy'' is so transparently dishonest that it's mind-boglling that anyone would fall for it. Apparently you are more ''needy'' if you can get a high return on a modest savings balance, because the deeming rate favours those who can get high returns. If you can't get a high return, you suffer discrimination and deprivation. If you have a little more savings, acquired perhaps by going without a lot because you knew you'd have high health and care costs alter in life, you suffer discrimination and are denied the benefit of your savings. But if you have a nice little nest-egg getting 8% interest and a full pension, you are laughing. And THAT'S what some fools call ''prioritising need''. No. The needy are being screwed. The responsible battlers are being screwed. The really really needy - who have nothing - are being fed crumbs and insulted. And I think it's very deliberate and calculated to crush the middle class and upper working class.

    If not, please tell me which over-paid inflated-ego dimwit devised these dumb, unfair, destructive policies?
    HarrysOpinion
    19th Apr 2016
    4:09am
    Rainey, “I think it's very deliberate and calculated to crush the middle class and upper working class”.

    You are sort of, ‘on the money’. It is true that, a government full of plutocrats will push the envelope as far as they can to crush the middle class and upper working classes until these classes reach the point of intolerance and scream out in pain.

    Pushing the envelope to the ‘nth’ degree by the plutocrats in the ruling government, its advisers and ‘self-serving centres of study’ commissioned by plutocrats to come up with government biased recommendations to the point of a civil unrest by the classes against the ruling federal government is a very bad and dangerous policy.

    But, that is where it is heading after the blatant assault, impunity and insults against the middle and upper working class as well as retirees on part pension and full age pensioners in Australia, a process that began with the ex-Treasury helmsman Joe Hockey.

    The ousting of Tony Abbott as the PM and replacing him with Malcolm Turnbull was welcomed initially until it was realised how ineffective he is and the ‘Hero turned to Zero’. That’s the way it seems for now and more will be realised how far they have pushed the envelope against the lower, middle and upper working class immediately after the 2016-2017 Budget.

    The increased popularity of the leader of the opposition in the parliament and the Australian Labor Party has come about as a default arising from the dissatisfaction and civil unrest with the current federal government’s leadership. The current government will suffer a loss of many MP seats in the federal constituents at the next election.

    How does your MP vote on the issues that matter to you?

    https://theyvoteforyou.org.au/

    Discover how your representatives in parliament vote on issues you care about. You might be surprised by what you find. Share this with others and spread the word.

    A free and open source public resource. Everything here can be reused in your own project. Use their API to remix, play and tell your stories about how they vote to change our laws.
    OlderandWiser
    19th Apr 2016
    7:57am
    The problem I'm seeing now, HS, is we are dealing with a populace that is either totally arrogant and self-serving (''I'm doing okay and stuff you''; or ''look how much smarter I am than you fools - you deserve to suffer'') or is too dumb and green-eyed to see reality.

    Half the unaffected population (who didn't attempt look after their own interests) is screaming ''pensions only for the needy'' and repeating the Morrison/Green's lie (''Millionaires shouldn't get pensions) and the other half is saying ''stuff those who are hurting because I'm not''. Neither half is looking at the common-sense argument that punishing savers will destroy the economy.

    Divide and conquer strategies are being played very well. Turn the populace against 560,000 part pensioners by claiming their greed is causing the deficit blowout and lying about a new policy saving money - and of course lying about the true financial status of those it hurts. Now they are turning the populace against another minority group. They will keep segregating the population and turning one group against another in the hope that there will never be any united opposition to their destructive neoliberal policies.

    Those who were not hurt by the assets test change because they are below the threshold should wake up and realize that the policy WILL ultimately hurt them because it will drive pension costs up. The old ''when they come for me'' is relevant here. If you supported the assets test change, don't expect anyone to speak when your income is attacked - and it WILL be, because the economy will keep going backwards due to policy changes either implemented stupidly or deliberately designed to cause grief.

    We have too much private debt in Australia. We need people to save and invest. We need kids to inherit a bit of wealth to knock their debts down. We need incentives for people to save for retirement and to continue growing wealth in retirement. That's what will fix the national debt. Not bashing a select minority who have been doing what is good for the nation all along.

    The best way to reduce the cost of the aged pension is to provide strong incentives for everyone to look after their own retirement to the greatest degree possible, and to deliver security to retirees and those planning retirement.

    Yes, there's a better way to means test than with deeming rates. Test ACTUAL INCOME. In fact, the best way to reduce aged pension costs across the board WITHOUT causing unnecessary hardship is to abolish assets testing and deeming rates completely and means test income - with a provision that assigns a fair ''notional'' income to any non-returning asset that is being used as to artificially reduce income to escape the means test (including the family home if it's value exceeds a generous threshold).

    By abolishing assets tests and allowing people to enjoy the benefit of their past saving, the government would be providing a strong incentive for people to save. Then if they introduce sound programs to help the risk-averse and uneducated invest wisely, wealth generation by individuals would drive debt down and welfare costs down across the board and we'd have a far more prosperous economy. The needy would benefit because there would be more money available for welfare for those who need it.

    It's sad that jealousy, arrogance, and selfishness are the driving forces in society today, and are preventing people from seeing things as they are and supporting sensible social and economic reform.
    Bonny
    19th Apr 2016
    10:29am
    Rainey if they means tested the actual income then even I could manage my affairs to get a full pension. Now that is just ridiculous.

    As I have said many times a couple with a $1 million plus their house does not need the age pension.
    OlderandWiser
    19th Apr 2016
    9:51pm
    Bonny, as usual you oversimplify and use your own circumstances as the rule. Your circumstances are NOT typical, and SHOULD NOT be used to determine policy. Many couples with far less than $1 million and a house are not getting a pension, and in some cases they have a genuine need. Circumstances, source of savings, reason for savings, etc. are not taken into account- and they MUST be before you can make a sweeping generalisation like ''does not need the age pension''.

    How the hell would you know about someone else's circumstances.

    Sorry, Bonny, but you are arrogant, self-opinionated, self-serving, and just plain WRONG. You give no consideration to FACTS or differing situations. You make wild assumptions and presumptuous claims based on your own situation and minimal knowledge of the rest of the world. In short, your comments are misguided, self-serving BS that show no respect for the genuine rights and needs of others.
    Fliss
    19th Apr 2016
    10:37pm
    Wow Rainey! Well said - spoken like a realist! You have summed up this Bonny twit beautifully!!! YAY!!
    Mez
    19th Apr 2016
    9:21am
    Good advice as usual, Rainey!
    PlanB
    19th Apr 2016
    12:15pm
    The deeming rates AND bank rates are dreadful at the moment I try to have a few bob over the pension but the rates are so low and the fact that they deem us to be getting more than we are is over the top!
    Fliss
    19th Apr 2016
    10:37pm
    Very true PlanB. Sadly, very true.
    Poppa Bear
    27th Jun 2016
    11:19am
    Having scrolled through all the replies and comments, I notice that Mick is a glaring non-starter in the stakes. Could this be because Mick's beloved Labor Party is complicit in the setting of the deeming rates?
    wanderers
    27th Jun 2016
    11:35am
    Deeming rates are a bi-partisan policy. It is supported by both parties LNP and Labor so stop being one eyed ppeople
    PlanB
    3rd Nov 2018
    7:56am
    I don't give a rats about WHO brought in the deeming rates all I am saying is it is very dishonest -- and wrong!
    wanderers
    29th Jun 2016
    2:12pm
    Deeming rates are supported by-partisan so Labor also supported this. They voted for it.
    If a Self Funded Retiree is over 65 and does not earn over some $50000 in payee wages they are entitles to a Health Care Card with its benefits. The income from the Superfund is not taken into account for this benefit
    Nerk
    28th Feb 2017
    4:32pm
    Deeming is big business to the Turdball gov, all the little people with a few $ are deemed as earning interest, a saving for a bill is deemed, any small amount, the government must be making heaps, so all you pensioners out there with some money in the bank? draw it out slowly and put it under your bed and tell em nothing.
    Not Senile Yet!
    31st Oct 2018
    4:37pm
    We all know they should be irrelevant above a certain level.....but Our Govt is using it as a way to SAVE MONEY?
    It is relevant that below a certain amount there should be No Deeming whatsoever?
    But that is where the Govt makes the most savings and they have Never backpedaled on this!
    It is wrong to cause people to be penalised for having modest Investments/savings as a nest egg?
    Our Govt is Deliberately Screwwing the Aged on this issue and they know it?
    But there is a Large amount involved so it won't change unless it is challenged vigorously
    OR
    People start liquidating their investments and go back to Hiding it in a Tin?
    To me .....and many others.....it is a Blatant greedy Scam?
    PlanB
    3rd Nov 2018
    7:59am
    No way I would keep cash of any amount above $100 in the house


    Join YOURLifeChoices, it’s free

    • Receive our daily enewsletter
    • Enter competitions
    • Comment on articles