Govt makes cuts to deeming rates official
Following the cut to the official cash rate earlier this month, minister of social services Scott Morrison has announced social security rates will be lowered from 20 March.
Mr Morrison said the lower deeming rate will decrease from 2.0 per cent to 1.75 per cent for financial investments up to $48,000 for single pensioners and allowance recipients, $79,600 for pensioner couples and $39,800 for each member of an allowee couple.
“The upper deeming rate will decrease from 3.5 per cent to 3.25 per cent for balances over these amounts,” said Mr Morrison.
According to the government the lower rates will benefit more than 770,000 Australian part-pensioners and allowance recipients.
Mr Morrison said the cut in deeming rates shows the government “understands the pressures facing pensioners” and has a plan to support pensioners deal with rising costs of living and changing economic circumstances.
SMSF Association (SMSFA) director of technical and professional standards Graeme Colley said most pensioners with a reduced pension are impacted by the income test so the cut will mean a higher rate of pension from the government.
“They’re getting less from their investments [though], which is the offset for the other,” said Mr Colley.
Mr Colley said if pensioners are struggling at the moment, “the compensating increase in the age pension for the quarter-and-a-half drop in the interest rate won’t change things a great deal”.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.