How do you calculate deeming rates?


National Seniors Australia continues to call on the government to drop deeming rates as part of much needed reform to the retirement income system. Here’s a rundown of how deeming rates are calculated. Sort of...

A simple question with no answer


How do you calculate deeming rates?

Harry, one of our members, has been thinking the same thing. He’s a former university lecturer with a background in accountancy. He contacted us to tell us he had written to the Department of Human Services asking them what methodology they used.

He didn’t get a clear answer.

All Harry was given was a list of data related to changes in investment products. No formula.

Like Harry, we continue to ask questions about deeming rates.

We do this because it affects hundreds of thousands of pensioners (660,000 to be exact).

We maintain that government is using deeming rates to balance the budget.

Has there ever been a deeming formula?


We expect there was.

If there wasn’t, then how is it that the upper deeming rate magically followed the RBA cash rate from 1996 to 2011?

We can only assume there was a formula, but it was changed or abandoned after 2011.

If the formula was changed, then what is the new formula? And, why was the old formula changed?

If there is a new formula, why is there no consistency in the way the deeming rates changed in relation to the cash rate in the last eight years?

The latest change to the deeming rates, where the upper and lower rate were radically altered in July, clearly shows there is no consistent formula.

It appears to be at the whim of government


If this is the case, we can only assume the formula was abandoned after 2011.

Again, why was the old formula changed?

One assumption is this has nothing to do with a formula, but an obsession with balancing the budget and doing it on the backs of pensioners.

If we are wrong, then all the government has to do is tell how deeming rates are calculated and how they were calculated in the past.

As our Chief Advocate Ian Henschke said in a recent interview, “The deeming rate is calculated very simply - government wins, pensioner loses.”

“The gap has become so bad that now, for the first time in almost three decades, the pensioner is losing more than ever because the lower rate is sitting above the cash rate,” he said.

“With interest rates set to fall again, we will have to step up our campaign to get a change.”

“Older Australians with limited superannuation, don’t want to risk their life savings chasing unicorns on the stock market.”

“Along with a fair and consistent deeming rate, National Seniors is calling on government to provide easier access to safe government guaranteed investments options.”

A fair go for all retirees


We need to get the retirement income system right.

National Seniors Australia will continue to fight for a fair go for all older Australians, but we need your help.

Add your voice to the cause by joining our campaign for a fairer retirement income system.

Learn more

Join us today

Share your voice and select the benefits that matter to you with a National Seniors membership.

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