When will the increases kick in?<\/p>\n
Indexation will be applied on Saturday.\u00a0<\/p>\n
The changes will be applied automatically, so recipients won’t have to do anything to ensure they receive the increases, Services Australia’s website says<\/a>.\u00a0<\/p>\n The payments are being increased to keep up with inflation.\u00a0 (Getty\/Matt King)<\/p>\n Why aren’t other payments increasing?<\/p>\n It’s not their turn yet.\u00a0<\/p>\n “Different payment rates and thresholds are indexed on different dates throughout the year,” a Services Australia payment guide says<\/a>.\u00a0<\/p>\n Each quarter, a certain number of payments \u2014 but not all of them \u2014 are indexed.\u00a0<\/p>\n For example, pension payments were last indexed back in March<\/a>.\u00a0<\/p>\n Whereas Youth Allowance was indexed in January<\/a>.<\/p>\n What are the changes to deeming rates?<\/p>\n Deeming rates will increase from Saturday.\u00a0<\/p>\n The lower deeming rate: Increase from 0.25 to 0.75 per centThe upper deeming rate: Increase from 2.25 to 2.75 per cent<\/p>\n “We’ll automatically apply the new deeming rates if you have deemed income,” Services Australia’s website says<\/a>.\u00a0<\/p>\n What is deeming?<\/p>\n It’s part of the income test for Centrelink payments, including the age pension.<\/p>\n Deeming is a set of rules the government uses to work out how much income people earn from their financial assets \u2014 things like shares, superannuation, and bank accounts.<\/p>\n It assumes people receive a set income from the interest on those investments, whether they actually get that much or not.<\/p>\n But here’s the kicker: if your investment return is higher than the deemed rate, the government doesn’t count that extra money as part of your income.<\/p>\n That means anything you earn above that rate isn’t counted in the income test for the age pension.<\/p>\n And this means the lower the deeming rate, the more people can earn from their investments without it affecting their pension payments.<\/p>\n The increase to deeming rates could impact payments for some part-pensioners.\u00a0 (ABC Rural: Selina Green)<\/p>\n The Coalition government cut deeming rates back in 2020 to help retirees in the pandemic, with both parties pledging to freeze those rates leading up to the election in 2022<\/a>.\u00a0<\/p>\n It meant there was a bigger gap between the amount the government assumed some pensioners earned on their savings and what they actually earned, University of Sydney’s Professor of Finance Susan Thorp wrote in a piece for The Conversation<\/a>.\u00a0<\/p>\n<\/p>\n
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