Home owning seniors won't secure the full $800 pension bonus

Home owning seniors won't secure the full $800 pension bonus
Home owning seniors won't secure the full $800 pension bonus

Treasurer Josh Frydenberg has defended the deeming rate changes as reflecting that some retirees are getting higher rates of return than the very low bank deposits.

“We’re strengthening the arm of around one million welfare recipients,” he told ABC’s Insiders program.

“What’s important to understand is — it’s not a linear equation between or comparison between the cash rate and the deeming rate, because the deeming rate applies to a whole suite of assets.

“So it applies to bank deposits and a term deposit, could be at 1.75 per cent today, but it could apply to superannuation returns, and that’s averaging around 5.5 per cent — or to yields on ASX 200 stocks, which are averaging about 4.5 per cent.”

The changes to deeming rate will deliver a marginally better deal for more than 600,000 aged pensioners and 350,000 welfare recipients on other payments including the disability support pension, parent payments and Newstart recipients with investments.

But the “$800 pension bonus” has been branded disappointing for retirees after it emerged only seniors who don’t own a family home have a chance of securing the full amount.

The changes to pensioners’ deeming rates used to determine investment income for the asset test offers up to $804 for singles and $1053 for couples.

Around 75 percent of aged pensioners will get nothing from the changes to the deeming rate because they don’t have investments in super, shares or bank deposits.

Only seniors who do not own a family home will qualify for the maximum.

The New Daily has confirmed that, for example, ‘Alan’ a single aged pensioner who doesn’t own a family home and has $540,000 in financial assets will secure an extra $30.94 a fortnight or $804.50 a year in Age Pension.

However, if ‘Alan’ owned his own home and had $280,000 in financial investments he would only secure $18.44 a fortnight or $479.50 a year extra.

Tags: 
Interest Rates Pension

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