Effective from 1 July 2019, the amount of deemed income that will apply to financial investments will reduce.
This will mean that part-rate pensioners and allowees may have less income assessed from their investments. If a recipient is income tested, the effect of the reduced deeming rate may result in an increase in social security entitlements. However, any extra income will not be received until after the regular indexation of pensions and allowances from 20 September 2019.
The following table illustrates the new deeming rates:
This is a positive change for clients as the last time the deeming rates were revised downwards was in March 2015. Considering that interest rates have recently reduced by 0.5% since June 2019, the reduced deeming rates reflect the reduced income social security recipients may earn on their financial investments.
Assuming a client is not asset tested, and given the reduced deeming rate, the maximum amount of financial investments a person (or couple) can have without their pension or allowance entitlements being reduced under either the income or assets test is outlined below:
