900 DAYS SINCE TURNBUL LAST LOWERED DEEMING RATES – AND PENSIONERS ARE PAYING THE PRICE
September 19, 2017
It’s been more than 900 days since the Turnbull Government last lowered deeming rates, and pensioners are paying the price, with current deeming rates now significantly higher than real rates of return.
Interest rates have fallen from 2.25 percent in February 2015 to 1.50 percent today, yet Malcolm Turnbull has done nothing.
Deeming rates are supposed to reflect returns across a range of investment choices available in the market, but the Turnbull Government has failed to act by lowering deeming rates. It is well past time that he acted, and brought them into line with real rates of return.
Analysis in today’s West Australian newspaper shows that the big four banks and Bankwest have seniors accounts that go nowhere near matching the Centrelink rates.
According to Canstar, there are now only five small institutions with accounts mirroring the Centrelink deeming rates.
In November last year Labor moved a motion in the House of Representatives calling on the Minister for Social Services, Christian Porter to “reduce the deeming rates in line with falling interest rates, so that pensioners’ assets are deemed fairly and Australian pensioners finally get some relief.”
Currently a single pensioner’s savings are deemed at 1.75 percent on the first $50,200 and any amount over that is deemed at 3.25 percent.
For members of a couple the first $83,400 of their combined financial assets has the deemed rate of 1.75% applied. Anything over $83,400 is deemed to earn 3.25%.
Labor understands that in today’s low interest rate environment pensioners find it very difficult to get a reasonable rate of return on their savings.
Deeming is where financial assets are ‘deemed’ for the purposes of pension means testing to earn a certain rate of return, regardless of the actual earnings of the investments. These rates are determined at the discretion of the Minister for Social Services, Christian Porter.
The Turnbull Government should do the right thing by lowering the deeming rates and provide some relief to Australian pensioners.
MONDAY, 18 SEPTEMBER 2017