Centrelink payment rates will rise next week by a sizeable amount. But for many, the increases will be eroded by a big hike in deeming rates.<\/p>\n
Despite the legislated payment adjustments, thousands of recipients of fortnightly Centrelink payments could see the amount they receive clipped \u2014 or even cancelled altogether.<\/p>\n
The single age pension will jump by $22.20 a fortnight to $1200.90. For couples, there will be an increase of $16.70 each, which translates to $905.20 \u2014 or a combined $1810.40 a fortnight.<\/p>\n
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By continuing you agree to our Terms<\/a> and Privacy Policy<\/a>.<\/p>\n The biannual increase in the age and disability support pensions, along with the carer payment, occurs on March 20 and September 20 each year.<\/p>\n Independent financial planner David McGregor said the increases were effectively the result of a three-horse race.<\/p>\n \u201cThe increase is linked to increases in the consumer price index, the pensioner and beneficiary living cost index and male total average weekly earnings,\u201d Mr McGregor said.<\/p>\n \u201cWhichever measure increases the most is the one that is used to lift the payment rate.\u201d<\/p>\n Allowance payments such as JobSeeker are tied to CPI alone. A single JobSeeker recipient can expect an extra $15.10, lifting the payment to $817.50 a fortnight. Eligible couples receive an extra $13.80 a fortnight each, making their combined payment $1496.40.<\/p>\n The rates are higher if you have dependent children or are aged over 55 and in receipt of JobSeeker for longer than nine months.<\/p>\n For pensioners, the amount of assets you can have before you lose your pension under the asset test also increases.<\/p>\n \u201cFrom March 20, the single home-owning pensioner upper asset test cut-off will rise to $722,000, and for home-owning couples, $1,085,000,\u201d he said.<\/p>\n \u201cNon-homeowners are allowed an additional $258,000 in assets.\u201d<\/p>\n While most people receiving the maximum fortnightly Centrelink benefit will receive the full effects of the increase, a significant lift in Centrelink\u2019s deeming rates means that some will see all, or some, of the increased payment reduced.<\/p>\n \u201cIf you are sailing close to the income means test cut-off limits, you could lose your payment completely,\u201d Mr McGregor said.<\/p>\n The deeming rate system sees a notional rate of interest applied to all financial assets, which includes, cash, bank accounts, bullion, shares, almost all super funds, pension funds and gifts over certain limits.<\/p>\n Currently, the first $64,200 of total financial assets for singles is deemed to be earning 1.25 per cent a year. For couples, this rate applies to the first combined $106,200. In both cases, amounts above the thresholds are deemed to be earning 3.25 per cent a year.<\/p>\n This interest calculation produces an annual total which is divided by 26 to provide a notional amount per fortnight. That amount \u2014 along with employment income, net rental receipts, special private pension income and foreign income \u2014 is then applied against the Centrelink income means test.<\/p>\n For singles, each dollar over $280 a fortnight sees the pension clipped at the rate of 50\u00a2 for each $1 until the pension is cancelled altogether when fortnightly assessable income exceeds $2619.80. There\u2019s an additional $300 a fortnight allowed if the income is from employment.<\/p>\n Couples lose the pension when combined fortnightly income exceeds $380. Pensions are clipped by 25\u00a2 each for every $1 over the threshold.<\/p>\n Frozen in response to the COVID-19 pandemic five years ago, Centrelink had held the deeming rates at historically low levels until last September. A 0.25 per cent increase then was the start of a process to \u201cnormalise\u201d deeming rates. This time, however, the recent official interest rate increase by the Reserve Bank was also taken into account.<\/p>\n The bottom line is that from March 20, the lower deeming rate jumps from 0.75 per cent to 1.25 per cent a year, and the higher rate moves from 2.75 per cent to 3.25 per cent.<\/p>\n \u201cThis time last year, a single with $300,000 in financial assets qualified for a full age pension under the income test,\u201d Mr McGregor said.<\/p>\n \u201cAssuming the same amount in financial assets now, that same pensioner after March 20 will have their pension reduced by $82.65 a fortnight.\u201d<\/p>\n In March 2025, a couple with a combined $450,000 in financial assets qualified for a full pension under the income test. From March 20, their pension will be clipped by $93.67 a fortnight.<\/p>\n Someone who has the increased deemed income added to other assessable income could lose their pension altogether.<\/p>\n","protected":false},"excerpt":{"rendered":"Centrelink payment rates will rise next week by a sizeable amount. 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