Compare deeming accounts and invest to earn more money in retirement
Financial investments for retirees such as a savings accounts or term deposits are subject to the federal government's deeming rules. Deeming is a key part of the pension system. Learn about deeming, the different types of deemed financial investments and compare deeming accounts on this page.
What is a deeming account?
Deeming accounts are bank accounts for over 55s and pensioners. A deeming account can return interest in line with the government's deeming rate. Bank accounts and savings accounts are among some of the most popular deeming accounts. Retiree share trading, cash management and term deposits accounts are also deeming accounts. The government assumes these accounts give a return equal to the deeming rate, the rate used to calculate pension payments.
What is the deeming rate?
The deeming rate is the expected rate of return from different financial investments based on the amount invested. The Department of Social Services uses the deeming rate to calculate pension payments. 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.
- An income stream from a superannuation fund in the pension phase.
- A payment from the Department of Social Services, for example the aged pension.
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
Main deeming accounts
Other deemed investments
Other financial investments assessed under deeming rules:
- Overseas managed investments
- Interest rate products
How to compare deeming accounts
Key to features to compare:
- Monthly fees. Deeming bank accounts are made for retirees. They’re mostly fee free. Some accounts give a number of free transactions such as ATM withdrawals every month. Other accounts waive transaction fees altogether. Fees may apply for telephone banking transactions, transactions at a branch and overseas transactions.
- Interest rate. These accounts can have a tiered interest rate loosely linked to the government deeming rate.
- Account access. Funds are available at call. You can withdraw money from this account in person or electronically whenever you wish.
- The interest rate. What is the return on your cash investment? Investing for a longer time can get you a return above the deeming rate.
- Investment length. What are the minimum and maximum investment terms. Longer terms give greater returns.
- Maturity options. For example, do you get a special bonus if you reinvest your funds when your term deposit matures.
- Commissions or fees. Compare the commission and fee structures of different trading platforms. Some brokers can charge a little extra for specific trades.
- Trading options. What options are on offer for different types of trade, for example placing and timeframe rules.
- Tools and support. Educational resources and 24 hour customer service are key features.
What fees do I have to pay when I open a deeming account?
What interest rate will I earn?
A list of institutions offering pensioner savings accounts
APRA has published a list of Authorised Deposit-taking Institutions offering retirement savings accounts.
- Commonwealth Bank
- Bananacoast Community Credit Union
- QANTAS Staff Credit Union
- Hunter United Employees Credit Union
- Queensland Country Credit Union
- Police Financial Services
- Defence Bank
- Heritage Bank
- Australian Defence Credit Union
Current September 2015
How do I qualify for the aged pension?
The aged pension is means tested. The government looks at your income and your assets to determine if you qualify for the aged pension or not.
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 meet pension or age eligibility requirements, you’re also asked to provide identification such as your drivers 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
Questions to help you understand deeming
What is deeming?
Deeming is a key part of Australian pension system. Pension payments are means tested. Higher income earners have lower pension payments. When retirees invest their savings, the Department of Human Services (DHS) estimates financial investments will return an income of X% based on the size of the investment. This is known as the deeming rate. If the investment returns more than the deeming rate, the extra income doesn’t reduce pension benefits.
What is the point of deeming?
The point of deeming is to get Australia’s pensioners to grow their savings balance through investing in products which offer a return greater than the deeming rate.
What are the deeming rates?
There are two deeming rates.
|For financial investments up to $48,600 in value (for singles) and up to $80,600 in value (for couples).||1.75%|
|For financial investments above $48,600 in value (for singles) or above $80,600 in value (for couples).||3.25%|
What are deeming thresholds?
The lower deeming rate reflects the choice of a financial investments with high liquidity — most retirees want their savings on hand. Savings accounts and short term deposits return a little above the lower deeming rate. Less liquid investments can return more.
Why does the deeming rate change?
The government sets deeming rates. Deeming rates can change every couple of years. Deeming rates have moved down in recent history to reflect a record low cash rate. A lower deeming rate means more money for pensioners.
How did the deeming rules change in 2015?
At the start of 2015, the government made some key changes to the way it calculates social security benefits for retirees. Account based pensions were included in the pension income test. An account based pension is an income stream from an investment made with superannuation money or an account where super benefits are paid. The new rules have been introduced to make the system fairer. Take an example of a 70 year old man and woman who have $2,000,000 superannuation savings. They are paid 10% as a superannuation pension each year. This couple is also claiming dividends from other investments too. The changes made last year stop a person or people in this position claiming unnecessary benefits from Centrelink.