Frozen – the deeming rate edition

It’s not a reference to the popular musical, rather it’s about a pledge to pensioners to freeze the current Age Pension Means Test deeming rates, until 2024, giving them some certainty in the short term.

What is the deeming rate? Services Australia defines deeming as a set of rules used to work out the income created from your financial assets. It assumes these assets earn a set rate of income, no matter what they really earn. For more information, watch the Services Australia video.

By freezing the deeming rate at the current levels, some pensioners may benefit from earning additional interest on their deposit accounts as interest rates rise, without having their age pension payment rate reduced. A welcome relief for some given inflation and cost of living pressures.

Here are the rates:

• The lower deeming rate will be frozen at 0.25% for financial investments up to $53,600 for single pensioners and $89,000 for pensioner couples.
• The upper deeming rate will remain at 2.25% on investment assets over the amount of $53,600 (or $89,000 for couples).

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