Pensioners’ deposit rates continue to tumble as rates hit an all time low


Pensioners are continuing to draw the short straw when it comes to deposits, according to new Mozo analysis. 

Mozo found that on a balance of $53,000, the average pensioner account rate now sits at a mere 0.62%, which is a whopping 163 basis points below the deeming rate of 2.25%. 

“Although the government assumes pensioners are getting at least 2.25% annual return on every dollar over $53,000 in savings or investments to determine their pension income, the numbers tell a different story,” said Mozo Director, Kirsty Lamont.

Pensioners who have cash stashed away with the big four banks aren’t winning either, as Mozo’s analysis shows that the average return ranges from 0.21% to 0.35%. 

“Times have never been tougher for pensioners when it comes to generating an income from their savings, so following the third official rate cut this year it’s time the government did the right thing by older Australians and reduced the deeming rate,” said Lamont. 

AMP and Bendigo Bank were the providers offering the lowest pensioner rate in the Mozo database, while ANZ’s 9-month (0.15%) and 12-month (0.20%) term deposit rate are the lowest rates for those terms for any bank recorded in Mozo’s database. 

“There is not a lot of good news around for those in the market for a term deposit, with 86 deposit-takers slashing rates in the past two months and more cuts likely before Christmas as the latest official cash rate continues to wash through the market,” Lamont explained. 

BankVic currently has the highest 12-month term deposit rate at 1.05%, while the average 12 month rate sits at 0.64%. 

Mozo calculated that a $25,000 investment with the BankVic 12-month term deposit would see you earn $263 in interest, compared to $160 on the average term deposit rate.

Top 5 twelve month term deposit rates

ProviderRateBalance after 1 year
MOVE Bank1.00%$25,250
Judo Bank0.97%$25,242
Teachers Mutual Bank0.90%$25,225
Gateway Bank0.90%$25,225

“Notwithstanding the fact that term deposit rates are at an all time low, if you still want the security, there is still something to be gained by comparing rates before locking down your money,” said Lamont. 

So if you’d like to look at some of the current term deposit offers on the market, make your next stop our term deposit comparison tool

*As at 19 November 2020, 12 months at a $25,000 balance

Compare term deposits - last updated 26 May 2024

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