Retirement Income

Joanita Wibowo

"Slap in the face" for pensioners: Anger over $800 cash bonus

"Slap in the face" for pensioners: Anger over $800 cash bonus

About one million Australians are set to receive a cash boost of up to $1,053 a year, as the federal government announced changes to the pensioner income test.

On Sunday, the government said it will cut deeming rates, used to assess income from retirees’ financial investments, for more than 630,000 pensioners and nearly 350,000 people earning other income-tested payments.

Families and Social Services Minister Anne Ruston said the deeming rate on the first $51,800 of a single pensioner’s investments — and the first $86,200 of a couple’s — will be lowered from 1.75 per cent to 1 per cent.

The deeming rate for balances above those amounts will drop from 3.25 to 3 per cent.

Single pensioners whose income is estimated using deeming could receive an increase of up to $804 a year or $31 per fortnight, whereas affected couples will receive up to $1,053 a year or $40.50 per fortnight.

“We’re strengthening the arm of around one million welfare recipients, including 630,000 pensioners,” Treasurer Josh Frydenberg told ABC's Insiders on Sunday.

The payments will commence starting September, with the amounts being backdated to July 1.

The changes came following pressure from seniors groups and Labor to cut the official deeming rate to match the decline in interest rates.

“The decision shows the Morrison Government has listened to and acted on the concerns expressed by older Australians who receive a part pension,” said Ruston.

However, the Opposition’s Social Services spokeswoman Linda Burney said the rate cuts should have gone further to match the Reserve Bank’s current cash rate of 1 per cent.

“This lowering of the deeming rates today is far too little and far too late,” said Burney.

“It has been four-and-a-half-years that they have been dudding pensioners by charging inflated deeming rate.”

Deputy Opposition leader Richard Marles also described the move as a “slap in the face” to pensioners 

“Pensioners today will feel short-changed. We’ve seen five reductions in the cash rates since the deeming rates last changed,” Marles told Sky News.

“I think pensioners today can feel like this decision is a slap in their face. This is a government which is trying to balance the books on the back of pensioners.”

Since 2015, the deeming rates have remained at 3.25 per cent while the cash rate has dipped to 1.25 per cent.

The changes to the deeming rates also affect people on the disability support pension, carer payment, the parenting payment and Newstart. Around 75 per cent of aged pensioners will not be affected by the cuts.