THE federal government has been urged to lower pension deeming rates in the wake of the Reserve Bank cutting its official interest rate from 1.5 to 1.25 per cent.
Combined Pensioners and Superannuants Association policy manager Paul Versteege said with one rate cut, and possibly more coming, it was high time the government reviewed the deeming rates used to assess the income pensioners receive from their bank accounts and term deposits.
Deeming rates are currently set at 1.75 per cent for pensioners' savings of up to $51,200 for singles and $85,000 for couples; and 3.25 per for higher amounts.
Average term deposit rates are currently 2.2 per cent.
Deeming rates were last reviewed in March 2015 and Mr Versteege said term deposit rates had fallen by 1 per cent since that time.
"Historically, both the lower and the higher deeming rate have been set below the term deposit rate," he said.
"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 are actually getting.
"It's time the government took action and recognised the hardship imposed on pensioners by a low-interest environment."
Readers of The Senior agree.
"Over 10 years ago you would receive 10 per cent on your term deposit - and now it is under 3 per cent from banks," one NSW reader said.
"If a worker's salary dropped that much it would cause mayhem."
A Perth couple who approached their bank to see if they could actually invest their savings at the deeming rate said they were told this was impossible on an Australian bank account.
"As far as we are concerned this amounts to outright theft by the Australian government from age pensioners struggling to make ends meet," they said.
And from another reader: "My husband and I went to all the big banks prior to the federal election and asked for the current rates.
"We were almost laughed at when we complained about poor rates and were told to talk to our elected member."
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