Renato Mota
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Age pension increase from 20 March 2010

By TechConnect

On Saturday 6 March 2010, the Minister for Families, Jenny Macklin, announced the indexation of Centrelink’s age pension and other income support payments from 20 March 2010.

The indexed payments will apply to around four million Australians and pension payments will increase by:

  • $29.20 a fortnight for singles on the maximum rate; and
  • $44.00 a fortnight for couples combined on the maximum rate.

Following these increases, the Minister also noted the total pension payments for those on the maximum rate (including the base rate and pension supplement) will be:

  • $701.10 a fortnight for singles; and
  • $1,057 a fortnight for couples combined.

The Minister also announced that deeming rates will increase on 20 March 2010 from the record low levels during the global economic crisis. This will impact clients’ financial investments held by pensioners and other income support recipients that have recovered from the global economic crisis.

The lower deeming rate will increase from two per cent to three per cent for financial investments up to $42,000 for single pensioners or $70,000 for a couple. The deeming rate for balances over these amounts will increase from three per cent to 4.5 per cent.

The Income and Asset Test limits will also be indexed from 20 March 2010. Full details of all rates and thresholds to be indexed on 20 March are available at the Minister’s website by clicking on the following link – New Rates and Thresholds

Conclusion

The TechConnect team had previously investigated how the increase in the value of financial assets and increase in the deeming rate will impact your income test clients receiving an age pension at 20 September 2009. To review the @dviser article, please click on the following link: @dviser article

Financial advisers should be aware of these changes from 20 March 2010 when completing statements of advice for new clients and reviews for existing clients.