AUSTRALIA | The Age Pension increase has been welcomed by COTA, which said it would provide seniors with assistance amid rising household costs.
COTA Australia has welcomed the Age Pension indexation increase and noted the Government’s decision to stage increases to deeming rates, a move which, while not without concern, will give older Australians greater certainty to plan and budget.
COTA Australia Chief Executive Officer Patricia Sparrow said September’s increase of AUD 29.70 a fortnight for a single Age Pensioner will help pensioners keep up with rising household costs.
“The idea that all older Australians are wealthy is a myth. In reality, over one in four live in poverty. For those struggling with skyrocketing costs, an extra AUD 29.70 a fortnight will bring real relief,” said Sparrow.
This is one of the largest increases to the aged pension over recent years. However, Sparrow said the changes to deeming rates, after years of the rates being frozen to support people through the COVID pandemic and recovery, will no doubt come as a shock to some older Australians.
“Any decrease in fixed incomes is difficult for people to manage. However, staging the changes and coupling the introduction of the change with one of the largest pension increases in the past 60 years should offset the impact for many pensioners,” said Sparrow.
“Older people have told us that they want visibility of the government’s intentions to give them the opportunity to forecast and plan ahead. The staged approach to the deeming changes and the announcement ahead of its impact shows that the Minister has been listening.”
The Government has stated that the changes to the deeming rate will reflect rates of return that pensioners and other payment recipients can reasonably access on their investments.
“We’ll now be watching closely to make sure the Government’s statement, that deeming reflects what people can actually earn, is delivered in practice, not just in theory.”
Sparrow said that COTA will also be watching closely to ensure the government’s methodology for setting future deeming rates works for all older Australians, including those who are not digitally connected to online savings accounts.
“The Government says deeming will gradually return to levels pensioners can reasonably access, with independent advice from the Australian Government Actuary. That’s welcome, but it’s crucial that the methodology is designed to work for everyone. Deeming rates must reflect what people can actually get from their bank, not just headline online rates, and we look forward to engaging with the Actuary to ensure real over-the-counter banking products are properly represented.”
Sparrow said COTA is reminding pensioners that many banks already offer “deeming accounts” which guarantee returns that match the Government’s deeming rates, and that in some cases, better returns may be available elsewhere.
“Pensioners shouldn’t assume their bank is giving them the best deal. Many banks do offer special ‘deeming accounts’ that match the Government’s deeming rate, but in some cases, you can find products that deliver even higher returns,” she added.
“We’re urging people to call their bank today, check what they’re earning, and make sure their savings are working as hard as they can.”
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