Skip to main content

Posts

Showing posts from May, 2016

Age Pensions and Deeming

With the recent lowering of the cash rate by the Reserve Bank of Australia (RBA) there  has been renewed concerns over the Centrelink deeming rates applied for the age pension.  We have discussed this topic before and suggested that while it is a relatively simple mechanism to ‘average’ the various investments returns, we are concerned with the growing discrepancy between the applied rate and the cash rate. The current (May 3 2016) RBA cash rate is 1.75% while the Centrelink deeming rate continues be as high as 3.25%. While even the most common term deposit rates are less than 2.5%. Four years ago there was virtually no difference between the cash rate and the highest deeming rate. The result? Pensioners are receiving less! Some of the arguments put forward by those supporting the 3.25% rate include: Q. “Commercial superannuation returns are more than 7%, what’s wrong with 3.25%?” A. Super ‘funds’ generally recommend a more conservative fund balance balance for those in reti