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”.