National seniors group says the Coalition still has its hands in pensioners’ pockets
Labor and some seniors groups are underwhelmed by the Morrison government’s decision to cut deeming rates, with National Seniors Australia declaring the Coalition still has its hands in pensioners’ pockets.
After a voluble campaign from seniors organisations, the government on Sunday said it would adjust the lower deeming rate from 1.75 to 1% for financial investments up to $51,800 for single pensioners and $86,200 for pensioner couples, and cut the upper deeming rate from 3.25 to 3% for balances over these amounts.
The shadow minister for social services, Linda Burney, characterised the move as too little too late. “Pensioners were expecting better, after waiting over four and a half years since the government last adjusted the deeming rates,” Burney said.
“The Liberals and Nationals don’t deserve any congratulations. They have been dragged kicking and screaming to this by pensioner groups and Labor. The government has been short-changing pensioners to prop up their budget for years.”
The National Seniors Australia chief advocate, Ian Henschke, said the Coalition’s $600m commitment was welcome, but the change did not go far enough. “The truth is the Morrison government still has its hands in pensioners’ pockets at a time when they can least afford it,” Henschke said.
“What the government is telling pensioners is that they are earning three per cent on their investments, when most term deposits are not even returning two 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.”
The deeming rate is the amount the government deems your income to be from your financial assets. It calculates the amount of income received from a financial asset regardless of the actual return. This calculation is used for the pension income assessment and can affect how much someone receives through their pension.
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The issue has become politically controversial because cuts in interest rates have impacted retirees’ earnings. Older Australians argue they are being shortchanged by the system.
National Seniors says the new rates outlined on Sunday remain well above the rate pensioners will earn in their bank accounts, meaning the government is still treating people as if they are earning a higher income than they are earning in reality.
The chief executive of the Council on the Ageing (Cota), Ian Yates, was more positive, saying the government’s adjustment was “a reasonable, balanced response to a complex issue”.
Yates also welcomed the government’s decision to backdate the change to 1 July. He said it would be useful if the government reconsidered the current processes for setting deeming rates to remove “the current level of uncertainty”.
“This is an issue that can also be looked at in the treasurer’s proposed retirement income review, which Cota is actively discussing with government.”
Yates signalled the social services minister, Anne Ruston, would consider changing the current procedures, but the treasurer, Josh Frydenberg, told the ABC on Sunday morning: “We think that the appropriate process is the current one.”
Frydenberg said the current process where the social services minister made the decision with input was “a process that has served the country well”.
He rejected a question pointing out that the Coalition had spent an election campaign slamming Labor for a “retiree tax” at the same time as over estimating the income of pensioners via deeming rates.
The treasurer said Sunday’s decision would benefit pensioners by up to $804 as a single, or more than $1,000 as a couple.