Great news for retirees – The Government have changed the rules on deeming and made them better!

You may not know this, but when Centrelink are assessing the income a retiree earns on their investments, they don’t directly assess the income that financial assets produce, but instead Centrelink will “Deem” financial assets to earn a set rate of return.

The benefit of deeming financial assets are that:

  • It helps to keep payments steady instead of going up and down based on investment returns;

  • Provides an incentive to invest, as any interest rate achieved above the deeming rate doesn’t count as income.

The deeming rate is considered to be a notional return of a variety of asset classes and will change from time to time due to changing economic conditions. As such recently the Australian government has cut the deeming rates from 1.75% to 1.00% for the lower threshold and 3.25% to 3.00% for the upper threshold.

The main motivation for this change is the result of subsequent RBA Cash rate cuts. Most recently down to 1%.

The table below shows the deeming rates pre change:

table 1 - pension blog.PNG

The table below shows the deeming rates post change, which apply from 01/07/2019:

table 2 - pension blog.PNG

To illustrate how this may positively impact a person’s pension, we’ve provided an example below:


John is a 66 year old single retiree who earns $15,000 p.a. from some casual work he does form time to time. John also own his own home.

His assets are as follows:

  • Residence $1,200,000

  • Car $20,000

  • Contents $10,000

  • Super $300,000.

table 3 - pension blog.PNG

Understanding how to maximise Age Pension entitlement could positively impact your retirement and at the end of the day, maximising what you are entitled to is simply smart money management.

At Yield we enable Australians to live the life they love now and retire securely and we’d welcome the opportunity to review whether you are receiving all of the Centrelink entitlements you are eligible to and to discuss ways to improve your retirement position.

Click here to read more about how we can assist you to Retire Securely.

Written by James McFall

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About the Author

Founding Director and principal adviser of Yield Financial Planning, I founded Yield in 2006 with a vision of enabling Australians to live the life they love now and retire securely.  Advising on Share and Property markets for more than 20 years, I understand that to provide the best advice, our team must have a deep connection with what is important to our clients and it is in our company DNA to constantly challenge ourselves to evolve and innovate ways we can deliver a consistently exceptional client experience. I have been privileged to be recognised by the Financial Planning industry as the Certified Financial Planner (CFP) of the year, national finalist for 2018 and more recently by the IFA, as ‘Goals Based Adviser’ of the year finalist in 2019. This honour is alongside our company being named a finalist for the IFA Client Servicing Company of the year.