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C03/1997 DEEMING RATE CHANGE AND FINANCIAL INSTITUTIONS (FI) ACCOUNTS INTEREST RATES REFRESH
DATE OF ISSUE: 15 JANUARY 1997
DEEMING RATE CHANGE AND FINANCIAL INSTITUTIONS (FI) ACCOUNTS INTEREST RATES REFRESH
The purpose of this departmental instruction is to provide information on the deeming rate change, and an automatic refresh of financial institutions (FI) accounts interest rates effective from pension payday 30 January 1997.
On 5 December 1996, it was announced by both the Minister for Social Security and the Minister for Veterans' Affairs that the deeming rates used to assess income from financial investments would drop by 1 per cent, and would apply on the first payday after 23 January 1997.
The drop in the deeming rates by 1 per cent takes into account the 1 per cent fall in official interest rates over the past six months. It was also announced that the deeming rates will be reviewed every six months immediately before the March and September pension indexation increases, starting from September 1997. Any changes to the deeming rates would then be applied at the same time as indexation increases which would reduce disruption to pensioners.
The new deeming rates will be 4 per cent on income on the first $30,000 for a single pensioner ($50,000 for a couple) and 6 per cent on the balance over these amounts. As currently applies, pensioners whose financial investments earn more than the deeming rates will continue to have their income assessed at the deemed rate.
Under the new deeming rates, a single pensioner can have up to $52,500 in investments and couples $91,200, and still receive the maximum rate of pension. The deemed income on these amounts would be less than the 'free areas' of $98 a fortnight for single pensioners and $172 a fortnight for couples.
WHO WILL BE AFFECTED
Pensioners receiving the maximum rate of pension should not be affected by the rate change. In most cases, pensioners receiving less that the maximum rate of pension should expect an increase in pension from pension payday 30 January 1997. However, due to the interest rate refresh there will be some reductions. Details of reductions have been supplied to the System Support Officer in each State Office
Neither the Department of Veterans' Affairs or the Department of Social Security will be issuing automatic pensioner advices. State Offices have been provided with a standard letter to be produced for any reductions due to the FI refresh, and will also produce a standard letter for any treatment changes.
The following forms of advertisement will be used to publicise the new deeming rates:
- Newspapers - a joint print advertisement campaign will commence from
15 January for DSS and DVA. The print advertisement campaign will target all the weekend newspapers, national and city dailies, regional and suburban newspapers. Pensioners have been advised only to contact their local Veterans' Affairs office if they require further information.
- Minister's Press Release - (162/96 5 December 1996).
- Information Package to ex-service organisations
The FI refresh and deeming rate change processing was carried out over the weekend of 11-12 January. System Support Officers have been provided with information relating to processing. Any systems enquiries should initially be referred to the System Support Officer in your State Office.
For more information, the following officers can be contacted:
Publicity — Simone Cantrill (06) 289 6037
Policy Advice — John Bruce(06) 289 6441
ADP Processing — Murray Chynoweth(06) 289 6799