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Coalition and Labor have pledged to freeze the age pension deeming rate until 2024. Here's what that means for pensioners

Coalition Labor Scott Morrison Centrelink

Quite a bit goes into determining a person's age pension payments. (ABC News: Demi Lynch)

After the Reserve Bank increased rates for the first time since the pandemic, the Coalition moved to ease concerns for age pensioners by pledging to freeze the deeming rate for two more years.

Less than a day later, Labor has promised to do the same.

Let's unpack what that means for pensioners and look at the age pension scheme as it currently stands.

What is deeming?

It's part of the income test for Centrelink payments, including the age pension (but there's also an asset test that comes into play — more on that later).

Deeming is a set of rules the government uses to work out how much income people earn from their financial assets — things like shares, superannuation, and bank accounts.

It assumes people receive a set income from the interest on those investments, whether they actually get that much or not.

But here's the kicker: if your investment return is higher than the deemed rate, the government doesn't count that extra money as part of your income.

That means anything you earn above that rate isn't counted in the income test for the age pension.

So, the lower the deeming rate, the more people can earn from their investments without it affecting their pension payments.

The Coalition government cut deeming rates back in 2020 to help retirees in the pandemic, so this week's pledge isn't anything new — it's just keeping the current rate the same for another two years.

What is the deeming rate for the age pension?

For singles: The first $53,600 of your financial assets has the deemed rate of 0.25 per cent applied. Anything over $53,600 is deemed to earn 2.25 per cent.

If you're a member of a couple and at least one of you gets a pension: The first $89,000 of your combined financial assets has the deemed rate of 0.25 per cent applied. Anything over $89,000 is deemed to earn 2.25 per cent.

Any other election pledges for seniors?

On May 2, Prime Minister Scott Morrison promised to raise the threshold for the Commonwealth Seniors Health Card, with Labor quickly pledging to match it.

The card is offered to Australians over 67 who don't collect payments from Veterans Affairs and don't qualify for the age pension because the value of their assets is too high.

It gives them access to some cheaper Medicare services and prescription medicines.

There are income caps on people qualifying for the card:

$57,761 a year if you’re single
$92,416 a year for couples
$115,522 a year for couples separated by illness, respite care or prison

Both the Coalition and Labor have promised to raise caps from July 1. Those new caps would be:

$90,000 a year for singles
$144,000 a year for couples
$180,000 a year for couples separated by illness, respite care or prison

Are there any plans to move the age pension to a cashless card?

No.

The federal government's cashless debit card program is in place for some welfare recipients, but it is voluntary for age pensioners to take part.

You might have heard of it referred to as the "Indue card", which is a reference to the company that manages the card's payment infrastructure.

The Coalition says it has no plans to force age pensioners onto the cashless debit card. (ABC Goldfields: Isabel Moussalli)

In a nutshell, the scheme sees anywhere between 50 to 80 per cent of a person's welfare payment going on the card.

The card can be used like a regular debit card but can't be used to buy things like alcohol, gambling products and some gift cards — and you can't withdraw cash with it.

Earlier in the election campaign, several Labor MPs said the Coalition planned to extend the cashless debit card program to all age pensioners.

But Mr Morrison has shot down that claim, saying it was "an out-and-out disgusting lie".

"It’s not happening," Mr Morrison said.

And current Social Services Minister Anne Ruston said she while she thought the program could be extended to other groups, the government had no plans to force age pensioners onto the card — and ABC's Fact Check backed that up.

Labor has pledged to abolish the cashless debit card if it is elected, with Opposition Leader Anthony Albanese vowing to scrap the scheme last year.

Are there any plans to increase the pension?

We haven't heard any pledges from either the Coalition or Labor to increase age pension payment rates during the election campaign.

The Greens want to lower the pension age to 65 and have proposed a scheme that would boost age pension payments by up to $244 per fortnight.

Katter’s Australian Party wants the payment to go up by $200 a fortnight and an increase of the amount pensioners can earn before their payments are reduced.

The United Australia Party wants to increase the pension by $180 a fortnight.

And the One Nation Party wants to increase the Work Bonus scheme by $200 a fortnight — it also wants to increase the length of time people have to have lived in Australia to be eligible for the pension by five more years.

What is the pension age?

If you're born on or before December 1956, it's 66 years and six months.

If you're born on or after January 1, 1957, it's 67 years.

How much is the age pension worth?

The fortnightly maximum basic rate is $900.80 for singles and $1,358 for couples combined — but if you're a couple living apart because of health reasons, you're paid the same as singles.

Pensioners can also qualify for a pension supplement (a regular extra payment for utility, phone, internet and medicine costs) and an energy supplement (an extra payment to help with power bills) which can increase the overall payment.

Here's a breakdown of each of those:

Per fortnight	Single	Couple (each)	Couple (combined)	Couple apart due to ill health
Maximum basic rate	$900.80	$679.00	$1358	$900.80
Maximum pension supplement	$72.70	$54.80	$109.60	$72.70
Energy supplement	$14.10	$10.60	$21.20	$14.10
Total	$987.60	$744.40	$1488.80	$987.60

What are the age pension eligibility requirements?

Aside from age, there are three key eligibility criteria:

residency rules
an income test
an asset test

Do you have to apply to get the age pension?

Yes.

It's not something that happens as soon as you hit pension age — you have to submit a claim for the payment through Centrelink.

You can claim the pension online, you'll just need to make sure you have a myGov account and a Centrelink online account first.

But you can also submit a claim by mailing in the age pension form, phoning the Older Australians hotline on 132 300 or physically going into a Centrelink service centre (but book an appointment first).

You're allowed to submit your claim in the 13 weeks before you reach the pension age.

What's the asset limit to get the full pension?

It depends on whether you're in a couple and whether you own your home.

Generally, the asset limits test doesn't include your principal home and up to the first 2 hectares of land it's on — but the rules are different if you own and live on a farm.

Here are the cut-off limits for receiving a full pension:

Your situation	Home owner	Non-home owner
Single	$270,500	$487,000
A couple, combined	$405,000	$621,500

If your assets are worth more than the limit for your situation, your pension will be reduced.

Here are the cut-off limits for receiving a part pension:

Your situation	Homeowner	Non-homeowner
Single	$599,750	$816,250
A couple, combined	$901,500	$1,118,000

How much can you earn before your pension is cut?

The income limit is $180 per fortnight for singles and a combined total of $320 per fortnight for couples — that's regardless of whether you live together or live apart because of ill health.

If you're single, 50 cents for each dollar you earn over $180 is docked from pension payment.

If you're in a couple, 50 cents for each dollar over that combined income of $320 is docked from your combined pension payment.

However, if you're working in active employment — either as an employee or if you're self-employed — those cut-off points are higher under the Work Bonus scheme.

Under the scheme, the first $300 a fortnight you earn from your work won't impact your pension payments.

How does super come into this?

The government counts your superannuation in the asset test and the income test, during which the deeming rules apply.

It also takes into account your partner's super if you're in a couple — but that's only if your partner is either of age pension age or they're receiving payments from their super fund.

If you're applying for the age pension and your partner is under the age pension age and isn’t getting super payments, their super fund won't be considered in your income and asset test.