For 87 year old George Ray, falling term deposit rates could cost him some $500 per year, or around 40 dollars week. The Sydney pensioner says he will respond, by economising on food.
Even before the Reserve Bank cut official interest rates by a quarter of a percent, lenders began reducing their term deposit rates - some by much greater amounts than they cut mortgage rates.
The Combined Pensioners and Superannuants Association calculates that, due to that one rate cut alone, a single person with modest life savings of $90,000 in term deposits, would lose some $140 per year. For a couple with 130- thousand dollars saved in term deposits - the losses rise to 215 dollars a year.
The Association's Policy Manager, Paul Versteege says it's a serious situation for retirees facing the prospect of another one to three rate cuts in the coming year.
