Last month, the government announced that it would lower the deeming rates used for calculating pension payments, with the lower rates backdated to 1 July 2019.
The lower deemed rate, which was previously 1.75 per cent, was reduced to 1 per cent, and the higher deemed rate, which was 3.25 per cent, dropped to 3 per cent.
In an online article, Townsends Business & Corporate Lawyers explained that the lower deeming rate or 1 per cent applies to the first $51,800 of the value of financial assets for single pensioners or the first $86,200 of the value of financial assets for a pensioner couple.
The higher deeming rate of 3 per cent applies to the value of financial assets above $51,800 for a single pensioner or above $86,200 for a pensioner couple.
This reduction in the deeming rates, Townsends explained, will generally result in an increase in the age pension for individuals currently receiving a part pension and may allow others who were ineligible for a part pension to now be eligible for a part pension.
The reduction may also mean that individuals who weren’t previously entitled to the Commonwealth Seniors Heath Card, are now eligible, the law firm said.
Entitlement to the Commonwealth Seniors Heath Card, it explained, is subject to an income test but not an asset test.
“Consequently, the reduction in the deeming rates may now entitle individuals or couples who were previously excluded from both the age pension and the Seniors Health Care Card by reason of the income test to now be entitled to the card,” it said.
Clients who are now eligible following the changes to the deeming rates, it said, will need to submit a new application for the card.
