THE deeming rates might have been cut, but the federal government is still treating pensioners as if they are earning a higher income than they actually do.
While welcoming the $600 million announcement at the weekend, National Seniors Australia says the government "still has its hands in pensioners' pockets at a time when they can least afford it".
The organisation's chief advocate Ian Henschke said the government was telling pensioners they were earning 3 per cent on their investments when most term deposits were not even returning 2 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."
Mr Henschke said the lower deeming rate now accounts for four of the five drops in interest since the last adjustment, while the higher rate accounts for just one of the five rate drops.
"What is the justification for doing this?" he asked.
Mr Henschke renewed the call for deeming rates to be set independently, along with the pension and Newstart.
"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," he said.
"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."
Mr Henschke welcomed news that the opposition was looking at setting deeming rates independently.
- Read more: Govt cuts pensioners' deeming rates
- Read more: Retirees' incomes suffer as interest rates plummet
