Pensioners treated like April fools as bank profits hit $10.4 billion

“Two of the four major banks* have failed to pass on interest rates in “deeming” accounts to hundreds of thousands of Australia’s pensioners and are treating customers who have shown decades of loyalty with contempt” said Welfare Rights and Combined Pensioners & Superannuants Association today. The groups savaged the banks, stating: “their mega-profits are being made off the backs of hardworking families and retired Australians”. 

“One gets the sense with the banks that it’s all take and no give. With an estimated $20 billion tied up in deeming accounts, banks should be careful not to take older people and their loyalty for granted,” said Maree O’Halloran, Director of the Welfare Rights Centre and Charmaine Crowe, Policy Coordinator, Combined Pensioners and Superannuant’s Association of NSW. 

“Older Australian’s have a right to be annoyed with the behaviour of their banks. Banks were quick to reduce interest rates on these pensioner accounts at the beginning of the global financial crisis, and have recently jacked up rates on credit cards and home loans. The combined profits of the big four banks first half profits are expected to hit $10.4 billion, 31 per cent higher than the first half of 2009, according to yesterday’s Australian Financial Review. 

“Banks call the funds in deeming accounts “sticky money” – because it sticks to the banks rather than the pensioner. Banks should not take pensioner loyalty for granted because it might be costing pensioners dearly. 

“Deeming was introduced in 1991 when some pensioners had in excess of $100,000 earning no interest. Traditionally, banks have matched the deeming rates which are set by the Federal Government. On 20 March 2010 the lower deeming rate increased from two to three per cent for financial investments up to $42,000 for single pensioners or $70,000 for a couple. The deeming rate for balances over these amounts is four and a half per cent, up from three per cent. Age pensioners have, on average, $46,000 in financial investments, such as bank and term deposits, shares and managed funds. The National Australia Bank matches the current deeming rates. Many deeming accounts are open to people over 55, veterans and other Social Security recipients. 

“We urge pensioners to visit or call their banks to complain if they are caught by their financial institutions’ failure to adjust the deeming rates. 

“Easy access to funds in a simple and safe financial product like the deeming accounts is a priority for many pensioners. The Treasurer, Wayne Swan and the Minister for Families, Housing, Community Services and Indigenous Affairs Jenny Macklin should call the banks and urge then to do the right thing by their loyal, retired customers.” 

For comment: Maree O’Halloran: Director, Welfare Rights Centre: 0417 672 104 or Charmaine Crowe, Policy Coordinator, Combined Pensioners & Superannuant’s Association: 0410 612 182.

Media contact: 0410 612 182

Charmaine Crowe
Policy Coordinator
Combined Pensioners and Superannuants Association (CPSA)
Level 9, 28 Foveaux Street Surry Hills NSW, 2010
Phone (02) 9281 3588
Mob 0410 612 182
Fax (02) 9281 9716