Hi, and thanks for watching our What’s New video about a positive change to Deeming Rates.
Our advice strategy expert Iby is here to explain what’s new.
Hi, Iby. First of all, can you tell us what deeming rates are, and who it affects?
The simplest way to think about Deeming is that it's an assumed rate of return that Centrelink used for financial assets. So if you've got money in the bank or some shares, rather than looking at what is the actual amount that you're earning on those investments, Centrelink will simply apply their assumed rate of return. So anyone who receives a pension from Centrelink will have their income assessed. So that was the basically all pensioners who received a Centrelink benefit.
So what's happening with deeming rates?
So what Centrelink announced was that they are actually freezing the deeming rates, so there's a lower threshold and an upper threshold they've announced they're freezing those rates through to July 2024. So the rates will stay at .25 for the lower end and 2.25 for the upper threshold.
Do people need to do anything about it?
So what it means is if you've got some money in the bank with interest rates rising, we actually don't need to be concerned as to whether or not the change in interest rates will actually impact your age pension. So if you have some money in the bank, don't be concerned. Look to earn as much interest as you can, and rest assured that the change in interest will not impact your age pension. And is that the same for other investments like shares and managed funds? Correct. It is. So all those sitting there, the bucket of financial assets and regardless of what you earn, they will simply apply the deeming rates.
Thanks for that Iby.
Now this is only general information. Everyone is different, so before you do anything, consider your own situation. Or better still, talk to your financial planner at your next appointment about what might be right for you.
Thanks for watching our video.