Seniors cop hit on rates

SENIOR Australians are suffering a financial hit from age pension rules that have failed to keep up with falling interest rates.

Despite three official Reserve Bank interest rate cuts totalling 0.75 per cent since May last year, the pension deeming rate used to assess people’s income from cash and other investments has not moved.

A higher deemed income can result in lower pension payments, and the Federal Government currently deems income from financial assets to earn up to 3.25 per cent a year – well above the average interest rate now paid on savings accounts of just over 2 per cent.

This means that many seniors are judged to be earning more than they actually receive, putting pressure on the government to cut the deeming rate when it increases pension payments next month.

Ian Yates, CEO of seniors group COTA Australia, said pensioners were very sensitive about deeming rates and he hoped they would be cut in September.

“If people can’t get the deeming rate, they actually lose income because the government assumes they have got it,” he said. “If you earn more than the rate, it’s free money. We have flagged to the government that they should be looking at it.”

The most recent deeming rate cut was in March 2015 by then Social Services Minister Scott Morrison, to 1.75 per cent for a pensioner’s first $48,600 of financial assets and 3.25 per cent on every dollar above.

Palmer Portfolios principal Joel Palmer said government policy about deeming rates was not transparent.