1. ‘Deeming rules’ will apply to superannuation pensions which commence on or after the 1st January 2015.
For the purpose of Centrelink pension income test, superannuation income streams aren’t current-ly subject to the same ‘deeming rules’ that apply to financial investments like shares and term de-posits. Until now, super pensions have been excluded from the ‘deeming rules’ in a bid to encour-age more Australians to take them up.
‘Deeming rules’ increase the net earned income based on your assets by inclusion of superannua-tion account-based income streams during the income test. This is an assumed rate of return that might not necessarily be what you will earn on your investment. Deeming rates are adjusted peri-odically and can rise and fall depending on investment markets.
‘Deeming rules’ will come into effect on 1st January 2015. The extension of the ‘deeming rules’ applies to any asset-tested income stream (long term) that is an account-based pension, or an equivalent annuity product.
2. Changes in pre existing superannuation pension product on or after 1st January 2014 will subject the income from the new pension to ‘deeming rules’.
The exemption of existing super pensions and the inability to change your super without becoming subject to the new ‘deeming rules’ means that retirees will be locked into their superannuation pro-viders in 2015. If you’re close to retirement now is the time to speak to a SMSF specialist about starting your super pension and applying for aged pension.
3. ‘Deeming rules’ will be in effect for all superannuation pensions that are commuted on or after 1st January 2015.
Commutation of a pension is the conversion of the whole pension account into a lump sum or withdrawing part of it and continuing with a similar or reduced pension. If withdrawals are made from your super following the 1st January 2015 your pension will become subject to the new ‘deeming rules’ and result in reduced payments.