Deeming has pensioners screaming 227



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Interest rates fell last week, with many self funded retirees suffering financially as a result if they were invested in cash-related investments. This week, many have stopped to realise that the deeming rates being imposed by Centrelink to cap or limit their pensions are in fact being calculated at a higher rate than many can achieve in the cash-based investment market, the place where pensioners feel most safe parking their money. This has many pensioners in uproar, as the government can now seen to be penalising them for money they cannot earn through traditionally safe investment types.

The government, when it set up deeming is in fact trying to encourage pensioners to earn more income from their savings. But the fact is, that is becoming increasingly hard in the current market environment.

Deeming rates were last revised by the Government on the 1 July 2014 and is used to vary how your pension, benefit and allowance payments should vary. The most important calculations are based on these tenements:

  • if you are single and getting either a pension or allowance, the first $48,000 of your financial investments is deemed to earn income at 2% per annum and any amount over that is deemed to earn income at 3.5% per annum
  • if you are a member of a couple:
    • if at least 1 of you is getting a pension, the first $79,600 of your and your partner’s financial investments is deemed to earn income at 2% per annum and any amount over that is deemed to earn income at 3.5% per annum, or
    • if neither of you is getting a pension, the first $39,800 for each of your and your share of jointly owned financial investments is deemed to earn income at 2% per annum and any amount over that is deemed to earn income at 3.5% per annum.

That means, if you have $100,000 in a term deposit, the Government is assuming you are able to earn a 2% return on the first $48k then it is penalising you to the tune of 3.5% for the remainder of your savings over and above $48k.

Interest rates coming down means however that a term deposit on $100,000 is achieving an income of less that 3.5% over the period of a year at this time.  In fact on one comparison site, the rates were running at between 3.2% and 2.5% with no rates available at 3.5%.

It used to be that the deeming rates were set at such a low level that pensioners were likely able to receive additional income from investments and have it “not counted” when assessing your rate of pension, benefit or allowance.  Now, most pensioners are unable to achieve the returns the Government are penalising them for without stepping into the riskier investment classes of property and equities.

Could it be time for the Government to revise deeming rates significantly?  Take our poll below so we know if you are being affected by these high rates of assessment and want them revised.  And share your thoughts below. 

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Rebecca Wilson

Rebecca Wilson is the founder and publisher of Starts at Sixty. The daughter of two baby boomers, she has built the online community for over 60s by listening carefully to the issues and seeking out answers, insights and information for over 60s throughout Australia. Rebecca is an experienced marketer, a trained journalist and has a degree in politics. A mother of 3, she passionately facilitates and leads our over 60s community, bringing the community opinions, needs and interests to the fore and making Starts at Sixty a fun place to be.

  1. So how do those smug self funded retirees feel now after continually having a go at those of us on government pensions. They are starting to feel the pinch and want the government to compensate them.

    26 REPLY
    • I can’t remember ever having a go at anyone on a government pension. I resent being labelled by someone who is doing the same to me! Why does this bickering go on?

    • Margaret.
      You may not have. But read some of the comments that are put on this site about govt pensioners being a burden on Australia. Or how we should have saved for our old age regardless of our circumstances. Or how we don’t deserve a decent life.

    • Thank you for your reply, Ruth. I have sisters on the pension. I truly believe people do their best with what they have!

    • Ruth. You are thinking of comments from the likes of chronic Liberal voter Graeme Condely. He and a small number of others have been particularly nasty on this site.

    • Ruth. I know lots of self funded retirees.. None of whom are smug… But I do know some are not doing very well … It’s not easy for every one…sounds like you have a jealous streak…

    • To add to what is being said, compulsive super did not come in until many of us were in 40’s or 50’s. Some lost what they had when September 9/11 in USA & the banks crashed, then the GFC then hedge funds crashing etc & have never recovered from it. Now some may have a bit of cash for safety squirreled away in term deposits & still can’t win!
      So please don’t critise seniors who have been caught up with criminal bankers & greedy politicians, they are doing the best they can, god bless you all.

      1 REPLY
    • I don’t think it sounds like Ruth Hourigan has a jealous streak at all but I do think that was a comment that could have been left unsaid Henry Doering. Unfortunately there has been smug and sometimes just plain nasty comments made regarding those who are not self funded retirees and the suggestion is often made that the only ones that have worked hard during their lifetime are the self funded ones. I’m sorry but this is just an observation that I have made.

    • that Joe Rudzic is another one who is very nasty and there are more, and that is why we have the attitude we have, you only take the kicks for so long before you start kicking back

    • Wanda and Bindy I have to agree with you both, there is no need for the disgraceful behaviour of some people here, these people are not aware of other peoples circumstances and there for should refrain from doing their best to insult people who like myself have worked my entire life just to make ends meet at times while salary sacrificing to improve my life when I retired, I believe I have done a damn good job however I didn’t start my super account until 1997 because I put my kids needs before my own.

    • Ruth Hourigan, how dare you call self funded retirees smug… We have worked hard all our lives and saved hard…. That doesn’t make us SMUG…

    • We agree with Carol Stuart. We were in our early 60’s when ‘Super’ became ‘the thing’.
      It would be great to read less negative and sometimes rather Judgemental comments on FB. Every person – both young and old – have his or her own set of circumstances in Life. PLEASE think carefully before making unpleasant comments.

    • Christina Stefurak

      One of the reasons a lot of us didn’t save for our retirement was because we were working out guts out for people who paid us minimum wages which were barely enough to feed our families and expected us to work many hours for free or be threatened with losing our jobs. While the bosses sat back and reaped the rewards of their employees hard work.

    • Wanda. I don’t have enough super to be self funded. I was nearly 40 when it came in. But I understand that people who had long term employment that paid into this super are now”self funded”. Even though they have paid taxes and levies all their working lives….I still think Ruth was a bit rude…

    • What stupid statement to make. Being self funded does not mean being smug!!! It means we sacrificed & saved for our retirement & are grateful for being able to do that. You are jealous & stupid to make such a comment!

    • We are self funded. We saved, never went on long holidays (usually holidayed with relatives.) We are not rich – we may even be eligible for a part pension, but have not as yet applied. I have never and would never have a go at anyone on a government pension. We are all in this together, old age is no joke.

    • I sense some resentment and jealousy at those who have worked to become self funded retirees. By the way I am not one of them.

    • Ps.. I’ll get the pension and a health care card and feel that I have earned it… Joe Hockey… I’m going to be a leaner… 8 months..

    • People please take everything with a grain of salt…there are people on these sites that are paid to stir up trouble especially on political storys.. I am not saying they are paid from the people running the site.

    • My husband worked 4 jobs when our boys were young, he missed out on a lot of things but needed to as we had to pay for our house,we are now self funded and we are not smug and find that statement very rude.

    • Ruth, most people on self funded retirment plans are far less well off than those on a pension simply because they do not get the benefits pensioners get eg: medical expenses where pensioners are bulk billed self funded retirees are not. By the way you worded your comment it sounds like you have an attitude problem with the world.

    • @Marilyn Armstrong Emerson .. I’m not sure if there are people paid on any fb pages to be annoying and rude … I think they’re on here because they have nothing better to do !!! They’re called Trolls !!

    • I can’t speak for Ruth and I won’t but she did not mean everyone, she meant the people who come in here abusing pensioners and as for trolls..I don’t think anyone who comes here is paid..I am not nor am I a troll I am a real person, with real problems just like everyone else

  2. I haven’t seen self funded retires having a go at pensioners. Most self funded have worked their guts out to be that way, so that’s a bit mean. And a lot if them actually get a part pension. Doesn’t change a managed fund a great deal, as other parts of the port folio come into play.

    9 REPLY
    • I think we are lucky that the country can afford to pay us a pension in our old age if we haven’t been fortunate enough to have saved enough for ourselves .our children as long as they have worked hard will have superannuation ., somethhing most of the over 60’s never were offered.

    • Yes I agree with you, just that Ruth was having a go at self funded retirees. And it is true that up until the last twenty years, hardly any one had super, just the house and savings. But being a part self funded also meant going without a lot to be able to put extra into the fund to have a better lifestyle later. Some could and some couldn’t .

    • Florence Cook you lead a lovely sheltered life pensioners are right up there with the dishonest DSP recipients and the bludging dole resCipients we want it all for nothing we were far to improvident to save for our retirement we preferred to smoke it and drink it away. Notwithstanding the fact that superannuation was only avaiable to upper and middle management the man on the factory floor was not worht it and of course there was absolutely no super available to working women after all we shouldnt have bern working at all(financial considerations notwithstanding) as women we should have been at home ironing daddies shirts and constantly pregnant…..only place for a women. But of course those in a better financial situation all truly believe that they are the only ones who worked hard and so have the inalienable right to pass any or all of the above remarks about there less fortunate brothers and sisters. Sorry to have spoilt your innocence

    • Joan Savell your rant was uncalled for and made no sense other then showing a bitter and twisted attitude. Did I say I was a self funded retiree? Did I sledge pensioners. No to both questions. I have led a far from sheltered life, don’t make assumptions, that is being ignorant and you have also displayed an arrogant bogan attitude.

    • AND a lot of these “So Called,self funded retirees”-HAVE HAD INSURANCE PAYOUTS!.Didnt save to retire-got lucky in the court room.I bet you all ,know at least one person-I know Of a “few”!!!

    • I bet they didn’t get too much once their legal eagles took their cut, and that works just the same for pensioners. There’s hundreds that live where I am who could sue the council for the footpath being too close to their bums, certainly not starving. Ha.

  3. Have to ask if they are really smug or if some of “we pensioners ” just wish we could have been self funded retirees?

    3 REPLY
    • Thank you Janice! I am a self funded retiree, not rich but comfortable! I don’t feel smug just happy with my lot, thankful for my hardworking husband who built our first home and extended our current 60+ year old home. He is the real reason we were able to become self funded retirees. I’m not smug, just grateful and content!

    • I think that the self funded retirees are entitled to every bit of entitlements and reductions as the next person. Just because they were able to plan and manage their finances doesn’t mean they didn’t pay their taxes and aren’t entitled.

    • It’s a pity that there wasn’t a chance for more people to have the option to self fund earlier. If govt. would stop changing the rules it could be a good system in the future. The next generation will hopefully gain from this. At the moment there’s 2 different pensions.

  4. I dont think they were smug they had to follow the rules set out by Government so the pension payouts could be reduced

  5. These self funded retirees have come in here and called the Pensioners names and called them do you like it? we only wish we had your money

    3 REPLY
    • Wow Bindy. Seems I’m on the wrong site. Sounds like you don’t want self funded retirees coming onto this site at all.we’re all name callers. I haven’t called anyone here names but I am self funded..

    • no no I don’t mean everyone. I mean the ones who are nasty to us, your not..I probably should said clearer but I have had a migraine all day

    • Thanks for putting it right. I know what a migraine can do to thinking clearly. Hope you’re better soon.

  6. I’m not surprised at anything this government does. Telling people they are earning 3.5% on savings when it is clearly not possible, shows just how much Liberals hate the aged. Clearly it is easier to penalize pensioners than to collect the billions from the tax avoidance schemes of the rich. In this case it behoves the government to advise exactly where we are going to get 3.5% interest on our savings. I trust they won’t advise putting our savings overseas…or will they?

  7. I am not self funded nor do I get a pension as I haven a slightly younger husband who is still working. I have worked since I was 16 and through difficult circumstances given birth to 4 children. I had next to no time off during pregnancy nor after with my babies as I needed to work to support them due to separation from one husband who wouldn’t work and another who lost his job through take over. I have worked raising also 4 step children. My husband passed away and I made a couple of wise investments in the later part of my working life to allow me to do a few things. I am now remarried and get NOTHING. SO DONT WINGE….we all make our choices and that is life. We have a good life in Australia….just appreciate it and stop being jealous and live it like there is no tomorrow……..

    9 REPLY
    • I’m jealous. Wish I had a half decent head for preparation for the future before it caught up with me…good luck to you , you done great job.. My life has been extremely turbulent and It still is somewhat. Bad choices maybe..

    • Likewise Dianne. I feel as though I staggered through life & missed something along the way. Might be an idea for financial planning to be a compulsory subject at school.

    • I am fortunate that God gave me a tough life from birth. I learnt to be independent my parents died when I was very young and elderly relies brought me up. So I had to make my life. I sure made some mistakes but learnt from them. That is the key if you learn from your mistakes and don’t repeat them and believe in yourself then you will succeed . Life is hard… But nothing we are not prepared for.

    • I am not a kept woman. I contribute to the household financially and physically. I have NEVER not . In fact I have kept a couple of husbands for a time.

    • Good for u!!! I just retired have small super however only have it as I lost my husband no pension till retirement age!! We both worked hard paid taxes etc etc my choice to retire now have to watch every penny too. It’s all about choices!!!!!

    • Yes…. People are so quick to judge. Instead of saying good luck to people they are jealous without knowing the circumstances. People think we are rich because I budget for holidays etc. but we don’t smoke nor drink. We go to the cheap movies if there is something on. Anyone can enjoy life with a bit of thought and care…..

  8. talking about centre link has any body like me had troubl;e trying to get them i am carer so busy full time ands trying to get hold of them for carers allowance all you get is answer phone 3/4 hour later still same so gave up i have not got the time to sit and try to get that where are people to talk to, like to hear of any others have that trouble please

    4 REPLY
    • Centrelink are fast closing down their offices and making it all phone , so if you can’t get sense out of the phone I would advise you to go straight away and sit for an hour or two before they close because it is not going to get bettee

    • We don’t even have a centrelink office in our town. Nearest one is 110klm round trip. And we don’t have any public transport. So if one doesn’t have a car and money to buy fuel and maintain that car, we have no access at all to centrelink.
      And as you say, trying to get anyone on the phone is a joke. It is all recorded messages.

      1 REPLY
      • Listen to the recorded message, Centrelink offer you a call back service, so you don’t have to wait. The easiest and fastest way to connect with Centrelink is through the internet. There is also a link on their webpage for them to phone you.

    • hahah we live in Cardwell and i cant get out the house to Ingham 45 mins drive i have a husband who has had a stroke so cant leave him. on the net they dont asnwer either

  9. the politions should live on a normal pension see if they can survive .because my wife works i get stuff all from them i worked my guts out for 50 years and this does not count the government should take a pay cut there are to many hangeres on doing nothing

    1 REPLY
  10. Credit Unions seem to pay higher interest rates than banks so it might be worthwhile ( for those that have money to invest) to check out the rates etc there.

  11. It should be reviewed and revised automatically every 6 months taking into account the lowest rate available

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