Retirees missing out on extra income: RateCity
Pensioners who have their savings parked in deeming accounts could do much better by shopping around for a better interest rate, according to RateCity.com.au's Michelle Hutchinson.
Unbeknownst to many retirees, income that is earned over the deeming rate (currently 3 per cent for the first $45,400 of a single individual's total financial investments) is not counted by Centrelink as assessable income, according to Hutchinson.
Pensioner deeming accounts were established for people who receive the age pension, and often offer transaction facilities and interest calculated along lines of the current deeming rates.
But it is up to pensioners to understand the system and make the most of the high interest savings accounts that are available, said Hutchinson.
"Interest earned on savings is often the most significant form of income for many retirees. So it's extremely important that pensioners do [their] research, find out how Centrelink calculates [their] estimated income and shop around for the best possible savings deals [they] can find," she said.
According to RateCity, the average rate for a pension deeming account with a balance of $5,000 is 2.9 per cent, whereas the average rate for a savings account is 3.76 per cent.
By putting their money in a savings account with the highest interest rate, a pensioner with a $5,000 account balance would earn an extra $94.17 over 12 months compared to the average pensioner deeming rate, according to RateCity.
The benefit for a $100,000 balance would be an extra $1,091.63 in interest over 12 months, according to the company.
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