Australian Age Pension & Deeming Rates Applicable

[4MyEgo]

I have just come across deeming and am a little concerned when it comes to applying for the age pension in the future.

 

I know one can receive the age pension when they reach 67 years of age subject to meeting the criteria, and can apply 13 weeks beforehand, the threshold for a non-home owner is about $543,750 in assets, however what happens to that money that is in the bank or in shares which is part of that threshold ?

 

If I read correctly for the 1st $60,400 of your investment/assets, a deeming rate is applied at 0.25% and over that it's 2.25% which would mean that you would have deemed to have made an income of $11,026 regardless if you made anything on your money invested, for example in the stock market and this amount would reduce the amount of the pension being paid to you ?

 

Can anyone confirm this or have any experience with this, as I thought if you had under $543,750 as a single person, you meet the assets test, but it looks like, you meet the assets test, but they stick it to you via deeming rates on your investment which is within the assets test ?

 

https://www.servicesaustralia.gov.au/deeming?context=51411#earnmore

[Fat is a type of crazy]

Keep in mind deeming applies of course to financial assets only eg not cars, furniture etc.

The way I read you are deemed to have income of 64000 x 0.0025 = $377.50 if you have $64000.

If you have $543750 in financial assets that would give you a deemed income of $377.50 plus $479750 x 0.0225= $11171. You are allowed if treated as a single person to earn $204 a fortnight or $5304 per year and then it starts cutting your pension by 50 cents in the dollar. So if you had $543750 in financial assets that would result in excessive income of $11171 - $5304 = $5867 resulting in a cut of $5687/2 = $2843 a year or $54 a week.  You would likely earn a lot more than this from your financial assets of course. If you had this much financial assets they may get you on the assets test as you would have other non financial assets pushing you over that limit. I may be a bit off but others may know better. 

Edited August 29, 2023 by Fat is a type of crazy

[4MyEgo]

13 hours ago, Fat is a type of crazy said:

You would likely earn a lot more than this from your financial assets of course. If you had this much financial assets they may get you on the assets test as you would have other non financial assets pushing you over that limit. I may be a bit off but others may know better. 

Thanks, yes I agree and it's good to get other opinions so as to be on the same page.

 

Deeming as far as I read says that regardless if you make more than the % they charge you on the value of your shares/money in bank, e.g. 0.25% on the 1st $60,400 and then 2.25% thereafter, they won't charge you more, i.e. it's more or less a fixed rate which offsets things.

 

Not sure I understand what you mean about other non financial assets pushing me over the "assets test", I anticipate having less than the assets test threshold for a non home owner on the single pension, i.e. $543,750, e.g. taking into consideration what it is going to cost me to continue living here till I get there and start receiving the single pension in about 4 years.

[Fat is a type of crazy]

2 minutes ago, 4MyEgo said:

Thanks, yes I agree and it's good to get other opinions so as to be on the same page.

 

Deeming as far as I read says that regardless if you make more than the % they charge you on the value of your shares/money in bank, e.g. 0.25% on the 1st $60,400 and then 2.25% thereafter, they won't charge you more, i.e. it's more or less a fixed rate which offsets things.

 

Not sure I understand what you mean about other non financial assets pushing me over the "assets test", I anticipate having less than the assets test threshold for a non home owner on the single pension, i.e. $543,750, e.g. taking into consideration what it is going to cost me to continue living here till I get there and start receiving the single pension in about 4 years.

Good one. 
I added the comment about how the assets test could eventually come into play as a theoretical but likely the income test would be the one to have an effect.