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Deeming rate delay proves why we need an independent body to set it

This week there’s been another interest rate cut and talk of more to come. 

This is bad news for those with savings accounts and it reminds us again why we are fighting so forcefully for deeming rates to be lowered. 

The deeming rates affect the amount of pension you receive. 

To leave the rates unchanged for more than four years while there have been five interest rate drops by the RBA shows the government is balancing the budget on the backs of pensioners who have their money in savings accounts.

You can’t demand - as the Treasurer and PM have both done, that the big banks pass on the full cut when the RBA lowers its rate and not do the same for pensioners. It’s not a good look.

The deeming rates have been unchanged at 3.25% for amounts above $51,800 for more than four years while the RBA rate has fallen 1.25%. 

The deeming rate for amounts under $51,800 is 1.75%.

The deeming rates must be adjusted. If the deeming rate is not dropped by the full 1.25% for amounts above and below $51,800, it will be manifestly unjust. The government has been banking the difference for more than four years.

We understand Minister Anne Ruston is likely to announce lower deeming rates next week.

But if the rates she announces are not dropped by the full 1.25%, then the difference in percentage will be part of the ongoing covert policy of having a “pensioner tax” on savings accounts. 

You can’t have credibility as a government attacking the opposition over a “retiree tax” and then have deeming rates left so high they are a pensioner savings account tax.

This affects hundreds of thousands of pensioners and also affects tens of thousands more who apply for a Commonwealth Seniors Health Card.

National Seniors is calling out the Coalition on this unfair policy and calling on all sides to take the politics out of the pension and give a fair go to pensioners by having an independent body oversee both the deeming rates and the pension. 

Josh Frydenberg has announced a review into the retirement income system. He can start here and make a fair independently set deeming rate that is linked to the RBA rate.

National Seniors believes an independent tribunal would take the politics out of the pension-setting process and help alleviate the chronic poverty being faced by pensioners – one-in-three women over-65 live below the poverty line and one in four pensioners overall.

We have teamed up with Australia’s oldest charity, the Benevolent Society, to fight for a fair go for age pensioners as part of a Fix Pension Poverty campaign.

The age pension has become a prime target for federal budget savings, with an ageing population and the overall cost used to justify cutting the number of people receiving the pension.

Many part-pensioners have lost access to the welfare payment due to the 2017 changes to assets test taper rates, while others have become ineligible for a Commonwealth Seniors Health Card. The unfair deeming rate has added more pain for pensioners.

Toxic debate

The discussion around the age pension has become “toxic”, with younger taxpayers being told by government they were bearing an increasing burden to fund it.

Politics must be taken out of the process.

An independent age pension tribunal is the first step to a fairer retirement income system that meets the needs of older Australians.

We wait with interest to see what Minister Ruston will do when she finally lowers the deeming rate. 

And the millions of older Australians and their families affected by that change will judge her and the Coalition by the amount it changes. 

Remember, one in three voters is now over 60 and they’ll be watching and judging.

A final point to consider is pensioners who get a bit more pension as a result of the change will spend that money and so stimulate the economy. 

So, in the present flat economic environment, it makes sense.

Media coverage

It's been a huge week for National Seniors Australia and its advocacy campaigns.

Chief Advocate Ian Henschke discussed deeming rates, electricity prices and home care wait lists in a wide-ranging interview on SkyNews on Monday.

He also talked to money and finance expert Ross Greenwood on Tuesday about how the deeming rate has become a pensioner tax by stealth.

You can catch up on these interviews via the In the Media section of our website.

Here, you will also find a segment from Channel 9's A Current Affair looking at CCTV cameras in aged care facilities, as well as further media coverage featuring National Seniors Australia.

Check it out

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