RBA cut: Government must lower pension deeming rates now!
“With one interest rate now announced and another one or two coming, it’s time the Government reviewed the deeming rates used to assess the income pensioners get from their bank accounts and term deposits”, said CPSA Policy Manager, Paul Versteege.
Deeming rates are currently set at 1.75% for the first slice of a pensioner’s savings ($51,200 singles, $85,000 couples) and 3.25% thereafter.
Average term deposit rates are currently 2.2%.
Deeming rates were last reviewed in March 2015 and term deposit interest rates have fallen by a full per cent since that time.
“Historically both the lower and the higher deeming rate have been set below the term deposit rate. Currently, the higher deeming rate is already well above the average term deposit rate, meaning that pensioners with term deposits are assessed as earning more money than they actually are getting”, said CPSA Policy Manager Paul Versteege.
”It’s time the Government took action and recognised the hardship imposed on pensioners by a low interest environment. The Government should stop compounding this hardship through deeming rates based on the wrong assumption pensioners get more interest than they actually do.”
“CPSA calls on the Government to urgently review deeming rates”, said Versteege.