Retirees are losing financial firepower in their Age Pension payments, with Centrelink’s Deeming Rates failing to follow falling Interest Rates.
Some advisers say the lack of action on Deeming is a “Government Cash Grab”, but there are strategies people can use to reduce the impact.
Deeming is used for the Age Pension Income Test and assumes a person’s financial investments (such as term deposits and savings accounts) earn a certain rate of income, regardless of what they really do earn. The current Deeming Rates (at 3 per cent then 4.5 per cent once Financial Assets exceed $45,400 for a single and $75,600 for a couple) have not moved since they were lifted in March, 2010.
Reported 3 September 2012 Anthony Keane, The Advertiser, page 62.
What are your thoughts? Are you on a Centrelink Pension with your SMSF like about 25% of our clients are?