Noel Whittaker's Blog All pensioners, whether they receive a full or part pension, will receive one if not two pension bonuses this month. They will receive more on a fortnightly basis as a result of the recent indexation of the pension rates and thresholds. The maximum single age pension has increased by $7.20/fortnight to $933.40 and for couples the pension has risen to $703.50/fortnight each.
But the greatest bonus will likely come, and for some already has, in the form of a lump sum payment directly into your bank account. The lump sum is as a result of the change to the deeming rates that were announced back on July 14, reducing the lower deeming rate from 1.75% to 1% and the upper deeming rate from 3.25% to 3%.
The maximum benefit, which equates to $804/year for singles and $1,040/year for couples, will apply to people who don’t own a home. For a single homeowner with the bulk of their assets in bank accounts, term deposits or shares they will benefit if their assets fall between $165,000 and $280,000, those with $280,000 will see a benefit of just over $18/fortnight or around $479 per year.
The changes to the deeming rates will benefit around 630,000 age pensioners and almost 350,000 people receiving other payments. On average, age pensioners are expected to receive an additional $314 a year for couples and $250 for singles a year.
Aged Care guru Rachel Lane points out that the changes to the deeming rates will also benefit people receiving government funded aged care – be it through a home care package or in a residential aged care facility. When it comes to aged care those who benefit won’t only be pensioners, self-funded retirees with financial assets can also benefit from the changes.
While an increase to the pension and a reduction to the deeming rates are welcome news – it is important to remember that the pension is assessed based on the outcome of an income test and an assets test. As a general rule of thumb, the income test will bite you first but the asset test will bite you harder. The trick to maximising any entitlement is to manage both tests well.
The maximum benefit equates to $804/year for singles and $1,040/year for couples. For a single homeowner with the bulk of their assets in bank accounts, term deposits or shares they will benefit if their assets fall between $165,000 and $280,000, those with $280,000 will see a benefit of just over $18/fortnight or around $479 per year.