Now may be a good time to compare your options for a pensioner high interest savings account.
Pensioner high interest savings accounts are specially structured to meet the needs of Australians over the age of 55 or receiving a government pension, like the Age Pension. Deeming refers to a system that the government uses to calculate the rate of return on savings accounts used by pensioners. By dropping that rate, the estimated income also drops. With that in mind, this is a good time for senior Australians to weigh their options when it comes to their savings accounts.
How does a retiree high interest savings account work?
A pensioner high interest savings account works almost the same way as your typical savings account offered by an Australian bank. One of the key differences is that many will have combined accounts, offering interest payments on the balance while allowing for unlimited access with a debit card and bill pay. This makes it easier on a senior to manage their savings and everyday spending from one convenient account.
What features do I compare?
As this is your money that will help see you through retirement, it is important that you are looking for features that can help ensure that your money grows. While comparing the different accounts available, look closely at the following features:
- No fees. You don’t want to be losing retirement money to monthly fees. Look for high interest savings accounts that do not accrue extra charges.
- Competitive rates. Check to make sure the rates being offered for your balance are competitive with other similar accounts.
- Accessibility. Many pensioner high interest savings accounts are tied together with your transaction account, giving you easy access through the use of a debit card. You may also be able to set up for direct deposits into the account and debits to pay for your monthly expenses.
- Available ATMs. If you will be making cash withdrawals, look at the bank’s ATM network to ensure that you will always be able to find one close by.
- Cheque facility. If you are still conducting transactions using bank issued cheques, look for an account that allows for this free of charge.
- Debit card. If you also want to be able to make purchases directly from your pensioner high interest savings account ensure that the debit card has a credit card logo.
- Flexibility. Pensioner high interest savings accounts are structured to make it easier on seniors to take care of their financial needs from one place.
- Fees. Banks typically do not charge fees for the use of a pensioner high interest savings account.
- Deeming. With the new regulations now in effect, pensioners will be showing a lower income rate from their high interest savings accounts.
- Bonus interest. Due to the nature of these accounts, earning bonus interest on balances is rarely an option.
- Terms. If you were to choose a term deposit as a part of your pension savings plan, you would be restricted in when you could withdraw the funds.
Have a question?
What is the purpose behind deeming?
For Australians who are receiving a pension or social benefits, deeming is used to calculate their income from interest earning savings accounts. By reducing that amount, a pensioner will appear to not be earning as much, possibly allowing them to receive more benefits.
How does a pensioner high interest savings account differ from a retirement savings account?
A retirement savings account (RSA) is set up before hand and is used once you hit a certain age to help fund your retirement years. This is an account that while earning interest is not available for your everyday use. A pensioner high interest savings account is a savings account that is set up after you have hit a certain age, in order to help manage your retirement money more easily.
Does deeming also apply to my declared income on my tax return?
No, the actual earned interest amount is used on tax forms. Deeming is only applicable for receiving government assisted services.