The Morrison Government’s decision to cut the deeming rates on pensioners’ savings is a start but not enough according to National Seniors Australia, the country’s peak advocacy group for older Australians.
The new rates of 1.0% down from 1.75% on savings less than $51,800 and 3.0% from 3.75% on savings above, remains well above the rate pensioners will earn in their bank accounts .
It means the government is still treating them as if they are earning a higher income than what they are actually earning.
“While we welcome the $600 million announcement today, the truth is the Morrison Government still has its hands in pensioners’ pockets at a time when they can least afford it.” said National Seniors Australia Chief Advocate Ian Henschke.
“What the Government is telling pensioners is that they are earning three per cent on their investments, when most term deposits are not even returning two per cent, how is that fair?” he said.
“Many older retirees, particularly women, rely on bank deposits because they do not have access to the higher returns from superannuation or are uncomfortable with riskier investments like the stock market. They will continue to be punished by higher deeming rates through no fault of their own.”
National Seniors Australia has been leading the campaign to get deeming rates down.
“The lower deeming rate now accounts for four of the five drops in interest since the last adjustment.
“The higher rate accounts for just one of the five rate drops in the last four years and four months.
“What is the justification for doing this?”
Mr Henschke says it also increases the need for deeming rates to be set independently, along with the pension and ‘Newstart’ instead of being set by the government of the day.
“It’s too tempting to have the deeming rates controlled by governments who have been using this for too long as part of their budget balancing process.
“Unless we have a clear understanding of the policy decision making process, this looks arbitrary and even if we do understand the process, it should be set by an independent authority.” he said
National Seniors Australia won’t give up on its campaign until the Morrison government sets the deeming, pension and Newstart rate independently. Mr Henschke has welcomed Labor’s comments that it is looking at setting deeming rates independently.