Leading seniors’ advocacy body COTA Australia today welcomed the Federal government’s announcement that it will lower deeming rates on investments held by part pensioners.
The 0.25% reduction in deeming rates reflects the Reserve Bank’s 0.25% cut in official interest rates, which will flow on to the interest banks will pay to holders of term deposits and similar investments.
Deeming rates are what government assumes pensioners are earning on investments and is taken into account when calculating a person’s rate of pension.
Mr Yates said COTA Australia had called on the government to review the deeming rate after the latest Reserve Bank decision and was pleased that Minister for Social Services, Scott Morrison, had acted quickly on this.
“Contrary to some media reports this is NOT a pension increase, rather it prevents part pensioners experiencing a cut in their income because the deeming rate is higher than the actual interest they can get on deposits.
“Hundreds of thousands of part pensioners will welcome this move to set deeming rates at a more realistic level,” Mr Yates said.
“Every dollar counts when you are an older person trying to balance your budget and these changes are a positive step by new Minister Scott Morrison.
Mr Yates said that over the recent past there had sometimes been significant delays in changing deeming rates to reflect market interest rates, to the detriment of pensioners, so prompt action this time is welcome.
Mr Yates said however that pensioners continue to be alarmed about the government’s Bill to reduce pension indexation to just CPI increase from 2017. This will result in a serious loss of pension income over time.
“If these changed indexation rates had been in place since 2009 full pensioners would already be more than $30 per week worse off, over $1500 a year, and that would increase further over time putting all full pensioners in poverty.
“This proposed change to the pension unfairly targets those who can least afford to take a cut to the their income – full pensioners with little or no other income and assets.
“Older Australians are asking the new Minister to go back to the drawing board on this policy and hold a review of the full suite of retirement incomes policies before they cut pension incomes.
“Over generous and ineffective superannuation tax breaks and issues relating to mature age employment need to be looked rather than this piecemeal approach which targets one group of older people over others.
“There needs to be a fairer and more integrated approach as we plan for the opportunities and challenges posed by Australia’s ageing population.”
Media contact: Ian Yates 0418 835 439, Jemma Williams 0409 510 879.
COTA Australia is the peak policy development, advocacy and representation organisation for older Australians, representing COTAs in every State and Territory and through them over 500,000 older Australians.