Lower deeming rates are here

Lower deeming rates are here

Good news is currently hard to find, but new lower deeming rates may give relief to some people through higher cashflows – and comes as good news.

Deeming simplifies how your investments are assessed for Centrelink/Veterans’ Affairs entitlements and aged care fee contributions, by applying a government set interest rate to all financial investments. This includes bank accounts, shares, managed funds and some account-based pensions.

But when deeming rates have been higher than what the bank is paying is interest, it has caused inequities, unless taking higher levels of risk are taken with investments.

What are the new deeming rates?

Deeming rates fell by 0.75% on 1 May. This has reset deeming rates to:

  Value of financial investments Deeming rate (per annum)
Single person Up to $51,800
Above $51,800 2.25%
Couple (combined) Up to $86,200  0.25%
Above $86,200 2.25%


Who is likely to benefit?

The benefit of the lower deeming rates may be seen through higher pension entitlements and lower aged care fees.

People who are likely to benefit are those:

  • Receiving a part-pension that is assessed under the income test
  • Paying an income-tested fee for home care packages
  • Paying a means-tested fee for residential aged care
  • Who are low-means and paying a daily accommodation payment (DAP) towards residential aged care accommodation.

Self-funded retirees who missed out on an age pension because of their level of assessable income may wish to review their situation to see if they now qualify.

We are here to help

If you benefit from the lower rates, you will see the age pension changes in your next payment. This will happen automatically without you doing anything. It may be a good idea to check your Centrelink records to ensure all balances and details are up to date.

If you are paying fees that are means-tested (or income-tested) fee towards aged care services, the reductions may not occur until after 1 July when the government does its next quarterly review and fee adjustment.

As this is still two months away, for some people it may be worth requesting an interim assessment, but care is needed as this will update all changes in your personal and financial situation.

If financial advice is needed, we are here to help. We can help with calculations and advice to ensure you are managing cashflow most effectively. And in the spirit of social distancing we are able to run meetings via video conferencing.

Contact us today.

Disclaimer: The information in this article is general and does not take into account your particular circumstances. We recommend specific tax or legal advice be sought before any action is taken and refer to the relevant Product Disclosure Statement before investing in any product. Current at 1 May 2020.

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