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Government deeming rate freeze to ‘shield’ social security recipients from cost of living pressures
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Government deeming rate freeze to ‘shield’ social security recipients from cost of living pressures
The rate used to determine the income earned from financial assets will remain frozen for age pensions and other social security payment recipients.
Government deeming rate freeze to ‘shield’ social security recipients from cost of living pressures
The rate used to determine the income earned from financial assets will remain frozen for age pensions and other social security payment recipients.
Prime Minister Scott Morrison has announced a freeze to the deeming rate for nearly 900,000 social security recipients following the Reserve Bank’s first rate hike in more than a decade.
The federal government said that the two-year freeze would provide greater certainty to Aussies receiving social security payments, including around 450,000 age pensioners and 440,000 other payment recipients.
“This is another shield to help protect Australians from the cost of living pressures people could feel from an increase in interest rates,” the PM said.
“In addition to our indexation of social security payments, we will guarantee the rate of income for people who could otherwise see their social security income drop because of the increase in interest rates.”
Deeming rates are used to determine the income of social security payment recipients who are earning money through financial investments including savings accounts, term deposits, managed investments, shares and some income streams.
Under the freeze, the lower deeming rate will remain at 0.25 per cent for investments of up to $53,600 for single pensioners and $89,000 for pensioner couples for the next two years.
Meanwhile, the upper deeming rate of 2.25 per cent will be kept for financial assets of over $53,600 for singles and $89,000 for couples.
“This guarantee will be a welcome relief to Australians who rely on both the social security system and modest income from investments by ensuring their payment rates are locked in,” Mr Morrison said.
“This builds on our commitments to support Australians on low incomes. Since 2019, our government has reduced the deeming rate on three occasions which has put hundreds of dollars back in the hands of pensioners and other payment recipients.”
Treasurer Josh Frydenberg said that the freeze followed a number of “temporary, targeted and responsible cost of living measures” announced in this year’s budget.
“This guarantee comes on top of our $250 cost of living payments, halving fuel excise, expanding access to the Commonwealth Senior’s Healthcare Card and cutting the price of Government subsidised medications,” he noted.
Labor senator Kristina Keneally confirmed that the opposition would match the Coalition’s deeming rate freeze.
“We have always said where there are good ideas we will support them,” she told ABC News Breakfast on Wednesday.
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