Cut to deeming rates will see pensioners slightly better off

Font Size:

Almost one million Australians will be better off by around $804 a year, after the Government announced a reduction in the deeming rates on Sunday.

The deeming rates will decrease from 1.75 per cent to one per cent for investments up to $52,000 (single pensioners) and $86,000 (couples), and the upper deeming rate will be cut to three per cent (from 3.25 per cent) for amounts over $52,000 (singles) and amounts over $86,000 (couples).

Single pensioners could gain up to $804 extra a year and couples $1053. Eligible Australians will receive the extra money from the end of September – in line with the regular indexation of the pension – but the payments will be backdated to 1 July. The move will cost the Government around $600 million over the next four years.

“We’re strengthening the arm of about one million welfare recipients, including 630,000 pensioners,” Treasurer Josh Frydenberg told the ABC’s Insiders program.

“This is about lowering the deeming rates, which will be good for them.”

While changes to the deeming rates are a welcome reprieve for retirees who have been punished by Reserve Bank of Australia rate cuts, seniors groups and retirees are saying it’s too little too late.

The Opposition’s Social Services spokeswoman, Linda Burney, agrees, arguing that the deeming rate should be more in line with the Reserve Bank interest rate, which is currently at one per cent.

Labor calculated that if the deeming rate came into line with the RBA cuts, single homeowners on a part pension would be up to $63 better off per fortnight or up to $1628 better off a year, with single non-homeowners potentially getting up to $3125 a year. Couple homeowners would have an extra $1850 and couple non-homeowners would be up to $3875 better off.

“This is too little too late, and seniors groups and retiree groups are saying very clearly this morning the way the Government has moved and the amount the Government has moved is simply not good enough,” said Ms Burney.

“The best the Government has been able to do today is make a move of less than 0.25 per cent in the upper rate, and 0.75 per cent in the lower rate.

“The cash rate is one per cent. The Government has not moved on deeming rates for four years, they have made a lot of money on the back of retirees.”

Ms Burney said the Government had used pensioners to boost the budget for the past four years.

“The Liberals and Nationals don’t deserve any congratulations. They have been dragged kicking and screaming to this by pensioner groups and Labor.”

However, Mr Frydenberg defended his call to lower the deeming rates by 0.75 per cent for the lower level and just 0.25 per cent for the upper level.

“What’s important to understand is – it’s not a linear equation between or comparison between the cash rate and the deeming rate, because the deeming rate applies to a whole suite of assets,” he said.

“So, it applies to bank deposits and a term deposit, it could be at 1.75 per cent today, but it could apply to superannuation returns, and that’s averaging around 5.5 per cent – or to yields on ASX 200 stocks, which are averaging about 4.5 per cent.”

Recipients of Disability Support Pensions and Carer Payments and Newstart payments will also be better off, with payments backdated to 1 July and the extra money coming into their bank accounts from the end of September.

Do you think the deeming rate cut is adequate? Should the deeming rates be decided by an independent party?

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 today
and get this free eBook!

By joining YourLifeChoices you consent that you have read and agree to our Terms & Conditions and Privacy Policy


Comment: Retirees hurt by tax cuts

Cuts will see retirees fall further behind, writes Kaye Fallick.

Don’t spend those deeming dollars just yet

Christmas? September? When will deeming rates be cut?

Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?



Total Comments: 33
  1. 0

    Not all pensioners. No investments nor other ways of earning money, only the Age Pension coming in. We don’t seem to get much help. Oh yes, sorry, got a bit towards our power bills! Wow…..this government gives to those who have more….and punishes those who have less

  2. 0

    The most needy pensioners will not get a brass razoo! You only get a rebate if you have too much money for a full pension. Another useless move by the government. You are so right Patti. Steal from the poor and give to the rich!

    • 0

      Hey Sandy, FYI, you can have the best part of $150,000 invested in cash, shares or superannuation and still receive the full pension. People who have a small nest egg deserve to be looked after by the government and receive the best possible returns for their investments to assist them in their daily struggles for a reasonable existence. Cheers Jacka.

    • 0

      Actually it’s $263,250 for a single home owner and a lot more for a non home owner, and they do deserve fair treatment and not have their pension reduced because the Government says they get more interest than it is possible to achieve on money in the bank.

    • 0

      Sundays – TOTALLY, COMPLETELY, ABSOLUTELY WRONG!! It still astounds me the number of people that do not know the difference between ASSETS and INCOME.
      It is NOT, absolutely NOT $263,250 for a single home owner. I am one, and CLEARLY understand this. You can have $263,250 (say made up of $5,000 home furnishings and a motorhome worth $258,000, mo money). This is ASSETS – and you can still get the full pension. The motorhome is not earning any money, so deeming does not come into it.
      BUT- if you SELL that motor home for $250,000 and put the money in the bank – then the money is DEEMED to be earning an income and your pension will drop from $926 per f/n to $871 per f/n.
      A really good site to check this is

    • 0

      In2sunset, the Asset test is $263,250 as you correctly pointed out. I also understand that you can earn $174 p.f single person on your investments before the taper rate takes effect. So yes, a full pensioner can have non income producing assets as well as cash investments up to a threshhold. My point really was that people who worked hard and saved for the little they have are not necessarily rich and deserve fair treatment.

    • 0

      You could have furnishings, car, motor home etc worth $163,250 and $100,00 in a term deposit and still get a full pension. My apologies if my post was confusing, but this does not make you rich.

    • 0

      Sundays, your furnishings and possessions are not replacement value. They are what you would get in a yard sale. For example, our car is worth $7,000 at the most, a 2007 Ford Focus. An old caravan could sell for $10,000 or less. Some couples have a car each, that is wealthy. We seem to lose sight of what wealthy means.
      Nearly $400,000 is too much and still get a full pension. I think it does make you rich.
      You need to compare this to someone with nothing. Single pensioners are becoming homeless. Another group in need is new start recipients who have not had an increase in 25 years.
      The lowest are the neediest and they are not being helped.

    • 0

      I agree Paddington up to a point. How do you differentiate between those who are needy due to circumstances beyond their control and those like one of my sisters who just spent up but now resents those who worked and saved. Why should savers be penalised. That is why I support a universal pension. However there should definitely be more public and low cost housing.Newstart is a disgrace.

    • 0

      Also Paddington its a double standard to say that having a $400k house and getting he pension is ok but having the same in investments is not. The pension is a right for all.

  3. 0

    I myself am happy with the changes. Could be better yes, and we have to keep working at it. But at least they are positive changes and not like the other party, that would of introduced changes (unfavourable) to franking credits, included the value of the home into assets and then introduced an inheritance tax. It’s not perfect but it’s not backwards

    • 0

      A positive step step I agree. Most of us worked hard for the extra investment and we get a bit of less punishment for having saved some money. The ones with nothing now want to call us rich (a man with no shoes calls the other with shoes rich). As it stands, if have some savings take them to the casino and you get the full pension and you are finally even with the permanent moaners. I take what they give me!

  4. 0

    I believe the 1% for the First $52000 is fair enough, however 3% for over $52000 is rather Ludacris. You can’t get anywhere near that in bank interest. (I appreciate shares and superannuation returns can be higher but they can also be way lower, it’s still gambling) I would suggest the rate for over $52,000 should have been down to 2.5% or if they are very generous 2%. Just my opinion, no one will take any notice of it obviously, have a good day, Jacka.

  5. 0

    Agree with JD in that it is a positive step for some. Putting money into term deposits will always earn more than the lower level deeming rate.

  6. 0

    Cowboy Jim, looks like it’s a mutual admiration society, you to make a lot of sense. Cheers Jacka.

  7. 0

    Leon, my understanding is that Newstart recipients are no included in this change, as their payment is not assessed under deeming but linked to wage increases etc please check?

  8. 0

    25% of pensioners will be better off by a max of $804 per annum for a single. What about the other 75% of pensioners & also SFR not doing it ultra easy & some only earning the equivalent of the OAP. Morrisson gave himself over $11k per annum & you Frydenberg wouldn’t be far behind that.
    Bloody parasite politicians,

    • 0

      Some SFR are doing very well. I went to a function recently, and it was all about the latest overseas holidays plus they all got to keep their Franking credits.

  9. 0

    If the Govt are claiming that these changes ONLY cost $600 Million over 4 years and the numbers of people are correct then increases cannot be as much as claimed.

    On AVERAGE the amount would be around $150 pa per person involved. NOTE the careful use of the term by Govt of UP TO a figure.

    But by backdating it to July 1 and Paying it AFTER 20 Sept people will get a payment that looks more substantial .
    Note also that in other media reporting the largest increases go to NON Home Owner Part Pensioners – much less to Home owners , and of course Part Pensioners assessed under the ASSET TEST receive NO INCREASE but are effectively being “Deemed” (although not deeming) at a 7.8% rate for all assets above the Min Threshold since 1 Jan 2017 Change

    • 0

      Good observations, Rodent. Also, the media has bent over backwards to hail this change as some type of windfall (e.g. the Sunday Telegraph called it a BONUS in big bold front page news), when they are simply partly correcting the crookedly set deeming rates.

      Also, I have not heard anyone especially in the media reporting the breath-taking hypocrisy of offering UP TO $800 p.a. stolen money back as a good deed, after they cut part-pensions by up to $14,000 p.a. with the Jan 2017 Asset Test changes. No mention from hypocritical Labor either.

    • 0

      Minor correction – “…UP TO $1,053 (for couples)…”

  10. 0

    Last Point

    The MOST ACCURATE and up to date – Age Pensioner calculator it this one by Noel Whittaker link is

    CAUTION if you are assessed on the Assets Test you MUST enter a figure in the INCOME box for it to Calculate correctly eg $100 will do.

Load More Comments



continue reading

Retirement Income

'Secret plan' to force retirees to use their home to fund retirement

Federal Treasurer Josh Frydenberg has backed the Retirement Income Review findings that retirees should use their savings more "efficiently" -...


Do life insurance payouts affect the Age Pension?

Geoff's death policy pays out to his children, not his wife. How does this affect the pension? Q. GeoffMy wife...


Grip strength linked to mental disorders

Mental disorders such as anxiety and depression can increase physical health risks and are a leading cause of disability. Globally,...


Tobacco and childcare drive cost of living increase

The Consumer Price Index (CPI) rose 0.9 per cent in the December quarter. According to the Australian Bureau of Statistics...

Age Pension

Retirement system ‘uncertain for almost all retirees’

Australia, a nation of almost four million retirees, has one of the world's best retirement systems. The 2020 Mercer CFA...


The big question: How much do I need to retire?

Life expectancies continue to rise, and with that comes a host of challenges. For governments, there's the increasing cost to...


Understanding the true cost of retirement

The Australian government spends billions on boosting retirement incomes. The two biggest costs, the Age Pension and superannuation tax concessions,...

Age Pension

Adequacy of retiree nest eggs

YourLifeChoices conducts several surveys each year to gauge the financial, physical and mental health of our 260,000 members. The aim...