Swan should match interest rates rhetoric and act on deeming rates
3rd October, 2012
Federal Member for Wide Bay, Warren Truss has called on the Gillard Labor Government to act on its rhetoric and cut the deeming rates for age pension, following yesterday’s cut to official interest rates by the Reserve Bank.“Treasurer Wayne Swan has demanded that the banks pass on the cut to official interest rates to borrowers. He should also take his own advice, lead by example and cut Centrelink’s age pension deeming rates,” Mr Truss said
“With the cuts to official interest rates, combined with the falls in the rates of return for investments and declines in financial markets, the deeming rate should be cut immediately to reflect the market realities.
“Every day that the Gillard Labor Government fails to do so it cheats part pensioners out of some of their age pension entitlement,” Mr Truss said.
“If the Government was serious about helping pensioners meet rising cost of living pressures, it would pass on the full benefit of interest rate reductions and implement lower deeming rates immediately.
“It is hypocritical for the Government not to cut its deeming rates for pensioners while calling on the banks to cut their interest rates.”
The deeming rate for pensioner’s investments is currently 3 per cent for the first $45,400 of financial investments for single pensioners and the first $75,600 for couples. The deeming rate is 4.5 per cent for amounts over those thresholds. The deeming rate is the assumed earnings from pensioner’s investments, whether they earn that amount or not and is added to the income test for assessing pension eligibility.
“Reductions in the deeming rate will mean that some pensioners will receive an increased pension, and it will help other people of Age Pension age to qualify for the pension for the first time.”
