Changes to JobSeeker and JobKeeper take effect

Changes to JobSeeker and JobKeeper take effect

The first decrease in the government social security payment keeping more than a million people financially afloat during the COVID-19 pandemic drops by $300 today, while the other keeping millions more in work tapers too.

The welfare subsidies were introduced after 932,000 people lost their job in the March to June quarters, according to the Australian Bureau of Statistics (ABS) leading to $55 billion being spent in welfare payments and stimulus initiatives.

What’s changing in JobSeeker

The JobSeeker coronavirus supplement peppering the social security payments of 1.45 million people drops by $300 per fortnight today. It’s the first scheduled decrease in the supplementary payment to the unemployment benefit. 

The fortnightly payments going forward will be:

  • Single: $815.70
  • Single, with a dependent child or children: $862
  • Single, 60 or older, after 9 continuous months on payment: $862
  • Partnered: $760.80
  • Single principal carer: $1043.10

The remaining $250 fortnightly coronavirus supplement built into these payments is calculated to cost the government $3.8 billion.

Among the new changes is the ability for recipients to earn up to $300 a fortnight -- basically, the amount of the reduction -- without forgoing the payment or affecting their eligibility for the coronavirus supplement.

However, the previously waived testing criteria is being reintroduced. These include the assets test and the liquid assets waiting period, while the partner income test will have its criteria tightened.

JobSeeker is technically due to expire on 31 December 2020, but an update on its fate is expected to be provided during the unveiling of the Federal Budget on October 6.

What’s changing to JobKeeper?

The government payment subsidising the continual employment of 3.5 million Australians will drop by $300 a fortnight on 28 September in the first of two decreases. 

JobKeeper payments will drop from $1500 to $1200 a fortnight for full time employees, while those working less than 20 hours a fortnight will receive payments of $750.

The payments are scheduled to drop again on 3 January 2021. The full time rate will drop to $1000 a fortnight, while the ‘part-time’ rate will reduce to $650, before the subsidy expires altogether on 28 March. 

JobKeeper represents the largest employment subsidy in the federal government’s $55 billion coronavirus aid package, the ABS said, costing taxpayers an estimated $31 billion. 

Trim the fat and spend less

A number of seemingly small actions could help lower your financial footprint during this extraordinary time. Shopping smart and being disciplined can pay off. 
 
These include:

  • If you have a mortgage: Consider calling your bank and asking to go on the new customer interest rate. The RBA says existing customers are on an average rate of 3.22 per cent; yet the big four banks now have variable rates starting at 2.69 per cent. On a $500,000 loan your monthly repayment would drop by about $140 a month, according to a RateCity analysis.
  • If you are renting: Be honest with your landlord and consider asking for a rent reduction – currently rents are dropping across much of the country – so your landlord may be happy to reduce your rent to keep you.
  • Reviewing bank and credit card statements: Scanning your statements provides a black-and-white look at your cash flow. Forgotten subscriptions and indulgent purchases can be spotted here -- as can any mistakes made by your financial institution or bill providers.
  • Shop second hand: Not only is it more sustainable, but buying second hand clothes may help save a lot of money. Most schools have second hand uniform shops, while second hand marketplaces like Gumtree or facebook could have some promising used toys.
  • Sell what you don’t need: A helpful way to get hard cash quick is by selling unwanted stuff. A recent Gumtree report found the average Aussie hopes to make $5800 by selling 19 unwanted items this year.
  • Shop around for cheaper mobile and home internet plans: This is the kind of bill people sign up to and then forget, and so checking the latest bundles could leave you with a saving of about $50 a month.
  • If you have a child in daycare/preschool: Don’t be afraid to talk to your daycare and ask if they can offer you a shorter day at a lower rate or a discount. Many centres are losing families and may offer you a deal to stay. 

It may be worth getting personal finance advice if you’re feeling the financial squeeze of COVID-19. The government’s MoneySmart website features a tool that’ll locate a free nearby financial counsellor

 

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Fact Checked -

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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What is a Westpac locked savings account?

The Westpac locked savings account (also known as "Westpac Life") can help customers reach savings goals faster through bonus interest. Customers receive 0.2 per cent standard base interest with a variable bonus rate of 0.35 per cent when the closing balance at the end of the month is higher than the opening balance.

There are some conditions to earn the bonus interest on Westpac's locked savings account, though. First, you’ll need to increase the balance each month either through a deposit or not making any withdrawals, and then link it to a Westpac Choice account and make at least five eligible payments using your debit card. Please consult your bank as to what an eligible payment is. 

What are the two types of NAB locked savings accounts?

With a locked savings account in NAB, you can earn bonus interest and learn financial discipline. NAB offers two types of locked savings accounts, each with their own terms and conditions.

The NAB Reward Saver account pays a variable base interest rate of 0.05 per cent per annum and a bonus interest of 0.55 per cent. You’re eligible for the bonus if you make a minimum of one deposit on or before the second last banking day and have no withdrawals in the month.

Meanwhile, the NAB iSaver account provides 0.05 per cent as the standard base interest rate and a fixed bonus margin of 0.55 per cent during the first four months from the date of opening the account. You can park your cash in the account and enjoy unlimited monthly transfers between linked daily bank accounts without impacting the interest rate.

Can you have multiple ING savings accounts?

Yes, you can open up to nine accounts with ING at any particular time. If you’re saving money for various goals, such as buying a car or taking a holiday, you can name each of your multiple ING savings accounts differently.

To get a Savings Maximiser account, you’ll need to deposit more than $1000 every month and make at least five additional purchases. If you also want to grow your savings, from 1st March 2021, you can earn up to 1.35 per cent per annum variable interest on one account with a balance of up to $100,000 when you also maintain an Orange Everyday account.

With ING, multiple savings accounts can help keep track of all your savings goals. All the accounts offer flexible withdrawals where you can withdraw as low or as high as you want without impacting your earning interest rate. However, you can only earn the bonus interest on one account. To apply for a Savings Maximiser account, you can visit ingdirect.com.au.

What is an ANZ locked savings account?

An ANZ locked savings account locks your money and prevents you from spending. You may use a standard savings account as the account where your salary is deposited. You can then withdraw funds when needed, but aren’t able to make purchases with it. However, this account may not grow much as the continual withdrawing of funds will limit the interest you can earn.

With a locked savings account in ANZ, you know your savings will grow because you can’t access the money. You can also qualify for a bonus when you deposit at least $10 per month and don’t make any withdrawals. To help you with this further you can set up an automatic transfer from your regular ANZ savings or transaction account so you don’t forget to make a monthly deposit.

Your ANZ locked savings account offers you a base interest rate of 0.1 per cent per annum plus an additional bonus interest of 0.49 per cent per year. The interest is calculated daily and credited to your account on the last working day of the month.

Should I open multiple savings accounts with UBank?

UBank offers customers an opportunity to make the most of their savings by opening multiple savings accounts. Having multiple savings accounts with UBank may be ideal for savers tracking different goals in separate accounts. 

It’s important to note that to earn bonus interest, you will still need to meet the conditions of the UBank savings account every month. If you don’t make these deposits, you will receive the standard interest rate, which is typically lower. 

Keep in mind that you won’t earn bonus interest on your UBank savings account in the month an account is opened and if you open multiple savings accounts with UBank, you'll start earning any bonus interest the following month. 

It's also not yet known how long the special interest rate will hang around for, so please check with your bank for more information. 

What are the requirements of an ING Bank locked savings account?

An ING bank locked savings account - also called a term deposit - offers you interest in exchange for holding your money for a period of time.

The terms offered include as little as 90 days or as long as two years. Generally, the longer you lock your money away, the higher the rate of interest. 

The minimum deposit amount for an ING locked savings account is $10,000. 

To be eligible to apply, you must: 

  • Be an Australian resident for tax purposes
  • Be aged 13 years or older
  • Hold the account for personal use (ING offers business term deposits as a separate product). 

 

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

Do I have to claim interest on my savings account?

When you lodge your income tax returns, you must include in the documentation all your sources of income, including bank interest. Your bank will report any interest you earn on the funds in your savings account to the Australian Tax Office (ATO). When the ATO then compares this information with your tax returns,  you also need to have mentioned the interest earned. If there is any discrepancy, you’ll receive a letter from the ATO. 

Avoid this situation by ensuring you receive your bank statement with interest noted. Then declare the interest in your tax returns and pay the tax that’s applicable based on the income tax rate.

You only need to claim your share of the interest earned for joint accounts. If you manage an account for your child and receive or spend money via this account, you will also need to report any interest earned from said account.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly.