National Seniors responds to deeming rates cut


As you may have noticed in newspapers, radio and TV, National Seniors Australia has been relentless in leading the charge to get deeming rates down.

On Sunday, the Morrison Government cut the deeming rate.

The deeming rate applied to pensioners’ savings up to $51,800 has been cut from 1.75 per cent to 1 per cent.

The deeming rate for savings over $51,800 has been cut from 3.25 per cent to 3 per cent.

That means if you are a single person with a savings account containing $100,000 the government will deem you to have earned $1,964 in interest, instead of $2,473 under the old rate.

In this example, the calculation is achieved by applying the 1 per cent deeming rate to all investments up to the value of $51,800 and the rate of 3 per cent to the amount above $51,800.

This is outlined in the table below.

New deeming rates* Previous deeming rates
Calculation Amount Calculation Amount
$51,800 at 1.00% $518 $51,800 at 1.75% $906.50
$48,200 at 3.00% $1,446.00 $48,200 at 3.25% $1,556.50
Total deemed income $1,964.00 Total deemed income $2,473.00

*New deeming rates apply as of 1 July 2019. The calculations above apply to a single person with a savings account containing $100,000.

The impact on older Australians


Changes to the deeming rate can affect your assessment for the Aged Pension, government Health Care Card and other concessions.

The government stated that the latest change will benefit 630,000 part-pensioners and another 350,000 people receiving other payments.

While the maximum benefit to a single pensioner will be $31 per fortnight and $40.50 for a couple, in reality the scale of the benefit will vary, depending on personal circumstances.

Any increase paid from the end of September will be back dated from 1 July 2019.

A good start, but not good enough


While National Seniors welcomed the drop in the lower rate, the higher figure remains well above the rate of return pensioners receive on their banking deposits.

National Seniors Australia Chief Advocate, Ian Henschke says the Morrison Government still has its hands in pensioners’ pockets.

“What the Government is telling pensioners is that they are earning three per cent on their savings, when most term deposits are not even returning two per cent, how is that fair?” he said.

Ian Henschke says National Seniors remains of the view that the deeming rate should be brought in line with the cash rate and that it should be set by an independent entity.

Our members were quick to acknowledge this. Here are some of the comments that were sent to us.

“I agree the recent adjustment in the deeming rates in calculating Age Pension is not good enough … The adjustment to the deeming rates of 1 per cent and 3 per cent is ridiculous when the best you can get on Trust Accounts is 0.75 per cent and up to 2.2 per cent (principally 1.96 per cent) on Term Deposits over $50,000.”

Lindsay, South Australia

“All those that have sacrificed and put aside for their older age are penalised by this system. It’s just robbery.”

Julie, via Facebook

While the Morrison Government has responded to National Seniors Australia’s campaign to bring the deeming rate down, expect to hear more.

Transparency and independence needed


National Seniors wants the process to be more transparent and set independently, rather than by politicians.

“It’s too tempting to have the deeming rates controlled by governments who have been using this for too long as part of their budget balancing process”, said Ian Henschke.

“Unless we have a clear understanding of the policy decision making process, this looks arbitrary and even if we do understand the process, it should be set by an independent authority.”

Comments from National Seniors members show that an independent body has strong support among seniors.

“An independent body to determine deeming rates is a great idea. Keep up the pressure!”

Mary, via Facebook

“Congratulations on the aggressive campaign regarding deeming. Please up the ante to have an independent body set the rates. Please raise the roof in media and through parliament to stop Australian pensioners being ripped off.”

Rob, Western Australia

“I'm not a pensioner but I fully support your drive to get the deeming rate set by an independent body. It is too open to being conveniently ignored by Treasurers looking to balance their budget.”

Robert, via Facebook

In the same way we campaigned against changes to franking credits, we’ll be campaigning on this issue all the way to the next election.

We need to protect retirement income!

Your membership counts


We could not have fought for a fairer deeming rate without your ongoing support. As one member said to us recently…

“I was so incensed about the deeming rates and so impressed with your stance that I joined National Seniors today.”

Ken, Victoria

So, if you are a member, thank you.

And if you are not yet a member, please consider joining.

Your membership fees directly contribute to our research and advocacy, so we can continue the fight for a fairer retirement.

Learn more

Join us today

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