‘Bad news’ for retirees

The Reserve Bank’s decision to cut interest rates recently spells bad news for retirees living off their investments, says the consumer lobby for older Australians.

The decision to lower the cash rate by 25 basis points to 2.75% was announced last week.

“The decision means the low, fixed incomes of many retirees are set to fall,” said National Seniors chief executive, Michael O’Neill.

“This rate cut will come as a blow for seniors living off simple investments such as term deposits,” he said.

“Official deeming rates, used to determine age pension levels, have not kept pace with falling interest rates while essentials such as electricity and gas continue to soar around the country.”

After six official interest rate cuts, Mr O’Neill claimed the federal government lowered the deeming rates for the first time in three years in February this year.

“They didn’t go far enough; it’s time to drop the deeming rates again,” Mr O’Neill added.

Your Money research, conducted in November last year, showed returns from term deposits and online savings accounts had slumped 15% to 30%.