How does deeming work?
Deeming is a key part of the pension system. Deeming is used to work out an assumed income created from your financial assets. The main type of financial assets are:
- Savings accounts and term deposits
- Managed investments, loans and debentures
- Listed shares and securities
- Some income streams
- Some gifts you make
Services Australia will include any deemed income in calculating pension payments. Deeming rules are in place to give retirees an incentive to invest savings to generate more retirement income.
What is a deeming account?
Deeming accounts are bank accounts for over 55s and pensioners. They should return interest in line with the government's set deeming rates, and this income is what is used to calculate pension payments.
Bank accounts and savings accounts are among some of the most popular deeming accounts. Retiree share trading, cash management and term deposit accounts are also deeming accounts. However, some accounts seemingly marketed at retirees or pensioners don't necessarily guarantee returns at the deeming rates.
What is a deeming rate?
The deeming rate is the expected rate of return from different financial investments based on the amount invested. If the financial investment pays more than the deeming rate, the extra income is not assessed by the government and pension payments stay the same. Deeming rules are in place to give retirees an incentive to invest savings to generate more retirement income.
Deeming rates change every couple of years. They are much lower now than in the past, reflecting the record low interest rates. A lower deeming rate means more money for pensioners.
What are the deeming rates?
There are 2 deeming rates. They depend on your specific circumstances.
|For financial investments up to $53,600 in value for singles; up to $89,000 combined for couples with at least 1 pension; and up to $44,500 in value per person for couples with no pension.||0.25%|
|For financial investments above $53,600 in value for singles; above $89,000 combined for couples with at least 1 pension; and above $44,500 in value per person for couples with no pension.||2.25%|
What are the types of deeming accounts?
|Transaction accounts||Term deposits||Savings accounts|
|Get full access to your money and benefit from a number of free transactions every month.||Lock in your money for a fixed return. Compare term deposits by SMSF and retirement friendly features.||Pensioner savings accounts are fee free, open to people 55 and over or receiving a government pension.|
Information you might find helpful
Who is eligible for a deeming account?
You can apply for a deeming account if you're over 55 and you're claiming a government pension. These accounts are investment products, there is no credit check. As well as meeting pension or age eligibility requirements, you’re also asked to provide identification such as your driver's licence and Medicare card.
How to apply for a deeming account
Follow the links on this page to apply for one of the accounts in our comparison tables. You’ll be redirected to the account provider’s website where you’ll able to complete a secure online application in 10 minutes.
Once you’ve submitted your application for a deeming account, you’ll be contacted by the account provider on the email you provided about the next steps. You may need to provide further identification. Once your identity has been verified you’re free to make a deposit into the investment account.Back to top
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