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Pensioners are set to feel the impact after the federal government raised rates on asset tests for welfare.
For the first time since the deeming rate was cut during the COVID-19 pandemic, the government will raise the rate from “artificially low levels” from September 20.
A deeming rate of 0.75 per cent will apply to assets under $64,200 for singles, with holdings above that at 2.75 per cent.
Those marks are up from 0.25 per cent and 2.25 per cent respectively.
But Social Services Minister Tanya Plibersek said the rates remained below historical, pre-pandemic levels.
“The social security system must be grounded in fairness, which is why we adjust supports as the economy changes,” she said.
“We’ll continue to make sure the system is there to support those who need it most, ensuring that everyone can make ends meet and no one gets left behind.”
The deeming rate is the government’s method of calculating earnings on savings to see if people are eligible for welfare payments, and how much they should receive.
Cuts throughout the pandemic and subsequent freezing have saved social security recipients $1.8 billion, the government said.
The Australian Government Actuary will recommend deeming rates moving forward, but the social services minister will retain final say and could still make adjustments during exceptional services.
Indexation, to kick in from September 20, will raise age and disability pensions and carer payments by nearly $30 a fortnight.
More than five million recipients across the welfare system are set for raises including more than 2.5 million on the age pension.
“Thanks to indexation, millions of Aussies will receive a boost to their payment to help them cover everyday costs like groceries and healthcare … the government wants to help take the pressure off when it comes to cost of living,” Ms Plibersek said.
Alex Mitchell
(Australian Associated Press)
