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Bank Accounts for Pensioners

Your guide to bank accounts for pensioners and how you can compare them with Savvy to find the best one for your needs.

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, updated on July 31st, 2023       

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Compare bank accounts for pensioners

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Bank accounts for pensioners explained

Pensioner accounts are designed to meet the needs of older Australians, with both everyday transaction accounts and a variety of savings accounts on offer for those in the later stages of life. Take a look at pensioner accounts with Savvy to find out what they have to offer and how to find the best accounts on the market.  We compare financial products to help you choose the right ones for you and your family’s needs.

What’s special about pensioner bank accounts?

Pensioner bank accounts in Australia are generally available to people over the age of 55 years of age who classify themselves as retired, receive a government pension or hold a concession card.  Banks generally offer aged pensioners and other concession card holders fee-free basic everyday accounts, just as they do for children and students.

These basic transaction accounts usually come with a debit card to allow the account holder to shop, make online purchases and arrange payments of bills.  In this sense, they’re no different from any other basic transaction account open to people of all ages.

However, many such everyday accounts are linked to savings accounts.  It’s in this area where there are multiple options for pensioners to choose from when deciding where to park their savings. Savings accounts offer a variety of features, depending on the amount to be deposited and the length of time that money is to be invested.  This is why it’s important to compare pensioner accounts before deciding which one’s right for you.

What should I consider when comparing pensioner savings accounts?

The best savings account will be one that offers the highest interest rate, the lowest fees and terms and conditions that aren’t restrictive and fit in with your lifestyle needs.  Savvy can help you find the best bank account by providing simple, easy-to-understand comparison information, including the following:

Fees

Look for savings accounts which have no monthly fees and no annual package fee. There should also be no withdrawal fees if you decide to transfer money from your savings account to your transaction account. Compare charges to make sure you find an account which offers the cheapest solution to your banking needs.

Interest-earning savings accounts

Many pensioner savings accounts offer tiered interest, which means the interest rate changes and increases the more you have in your savings account.  For example, for amounts up to $10,000, the interest rate may be 0.5% p.a., for balances between $10,000 and $100,000, the interest rate may be 0.8% p.a. and for accounts with over $100,000, the interest rate could be 1% p.a.  Some savings accounts specify that a minimum amount must be deposited each month to qualify for a ‘bonus’ additional interest rate, so watch out for any conditions which may apply when comparing accounts.

‘Locked’ savings accounts

These offer a slightly higher interest rate on the condition that no withdrawals are made on the account that month.  They effectively lock your savings away in return for earning more interest.  These accounts can offer a good incentive to keep your savings in place but beware of restrictive conditions that specify if withdrawals are made that no interest is earned on your savings for the month.

Term deposits

These are cash deposits which a saver agrees to leave with their bank for a specified period, which is known as the ‘term’ of the deposit.  The longer the deposit term, the higher the interest rate offered.  Pensioners can decide to park their savings in a term deposit ranging from just one month up to several years (typically a maximum of five). During this period, the money is locked away and no withdrawals are permitted at all.  In a low-interest environment, term deposits may offer the highest interest rates available.

Accessibility

It’s important to consider how accessible the account is for you.  Is it linked to a debit card or even able to be added to your digital wallet on your smartphone?  If you’re an individual who prefers to carry cash around, how many ATMs are available for you to use fee-free, and will you be charged fees for withdrawing from machines operated by other institutions?

What is deeming and how does it affect me?

The interest earned on your savings is considered to be income and is therefore taxed like regular income by the government. However, to simplify income tax calculations for aged pensioners, there’s a set of rules which assume how much interest is earned on assets, regardless of the actual interest paid.  There’s one set of interest calculations which apply to all Australians over retirement age, which is known as ‘deeming.’  The deeming rates offered to eligible customers as of March 2022 are as follows:

For single people

The first $53,600 of your funds have a deemed interest rate of 0.25% applied. Anything over $53,600 is deemed to earn 2.25%.

If you’re a couple and either one or both of you gets a pension

Initially, $89,000 of your combined funds has a 0.25% deemed interest rate. Any savings over $89,000 is deemed to earn 2.25%.

If you’re a couple and neither of you receives a pension

The first $44,500 of a couple’s assets have a deemed income of 0.25%.  Assets above $44,500 are deemed to earn 2.25% interest.

Types of bank account

Why compare bank accounts with Savvy?

More frequently asked questions about pensioner bank accounts

What are the eligibility criteria for pensioner accounts?

The eligibility criteria for pensioner accounts differ between financial institutions.  Some banks and financial institutions have a set age minimum limit, such as 55, 60 or 65, whilst others rely on retirement status to be eligible for pensioner concessions.  Many banks require proof the person holds a concession or pension card to be able to open a pensioner or concession bank account.

Which pensions can be accepted when applying to open an account?

These are likely to vary depending on the institution you’re banking with, so it’s worth checking with them first to ensure that your payments are accepted.  Eligible pensions can include:

  • Aged pension
  • Veteran’s Affairs pension
  • Disability Support pension
  • Carer Payment
  • Widow Allowance
What if I earn more interest than the deeming rate on my savings?

If the actual interest you earn on your assets and savings is higher than the deemed interest rate, the Australian Taxation Office will consider your income earned to be the sum arrived at by deeming.  This means your income won’t be factored into their calculations and you’ll simply earn it without being taxed.

Do I have to have a separate transaction account and savings account?

No – you can simply have one account which acts as a transaction account with a linked debit card but which earns you interest too.  These ‘hybrid’ bank accounts for pensioners may be the best option if you require a very simple banking structure, with just one single account that does everything you need and no fees. However, such accounts don’t offer the highest interest rate on the savings you may have, so you’re swapping interest income for convenience by choosing such an account.

Do I qualify for a pensioner account if I’m under 55 but have a health care card?

Yes – some banks offer accounts for pensioners and concession card holders regardless of age. Known as concession bank accounts, they offer basic transaction account features such as a linked debit card, EFT and BPAY payment facilities plus free access to ATMs to withdraw cash. The best part is that concession bank accounts don’t charge any fees (unless the account is overdrawn, in which case some banks do charge overdrawn fees which are usually around $10 to $15).

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