This week’s interest rate cut is bad news for retirees, says the consumer lobby for older Australians.
The Reserve Bank has decided to lower the official cash rate by 25 basis points to 1.50 per cent.
National Seniors chief advocate Sarah Saunders said the decision was bad news for retirees.
“This cut will be a blow to anyone living off simple, low-risk investments”.
Saunders called on the Government to now adjust the social security deeming rates accordingly.
“Having fallen steadily since 2011, interest rates are sitting at all-time lows”.
“Yet, the deeming rates, upon which pension entitlements are calculated, haven’t shifted since March 2015”.
“It’s only fair that deeming rates are adjusted to more realistically reflect current earnings,” she said.
Saunders also sounded a warning about the federal Government’s impending pension changes.
“Unless interest rates start to climb, self-funded retirees caught by the 2017 asset test changes will find themselves living off less than someone on a full age pension,” she said.
“And, if that’s the case, the next generation will ask: Why save?”