Westpac boss says retirees need term deposit rates higher than his bank's

Westpac Group CEO Brian Hartzer estimates New Zealanders reliant on term deposits need interest rates of about 4% to live off 'and that's getting really hard'

Personal Finance

Westpac Group CEO Brian Hartzer estimates New Zealanders reliant on term deposits need interest rates of about 4% to live off 'and that's getting really hard'

10th Oct 16, 3:01pm by Gareth Vaughan

Westpac Banking Corporation CEO Brian Hartzer reckons retirees dependent on bank deposits need interest rates of about 4% to live off.

Hartzer made the comment in an interview with the NZ Herald during a recent visit to New Zealand.

"One of the things that we feel very deeply is for our older customers who are reliant on bank deposits for their income, rates are getting really low," Hartzer was quoted as saying.

"Our estimate in NZ is people probably need interest rates around 4% to live on and that's getting really hard," added Hartzer.

Westpac New Zealand's highest current carded, or advertised, term deposit rate is its 3.50% six-month rate. The Official Cash Rate is currently at a record low of 2%.

See all banks' advertised term deposit rates for one to nine months here, and all banks' advertised rates for one to five years here.

Hartzer was also quoted as saying "there is a tremendous amount of anticipation and hope in the international markets" that the US Federal Reserve will increase its benchmark interest rate soon, probably in December.

"We think the signs look pretty good that there will be a rise in interest rates in the US ... on balance, I think it will be a positive thing because as interest rates get really low it puts real pressure on the profitability of banks and the ability of banks to lend to support the economy," the Herald quoted Hartzer as saying.

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12 Comments

by Stephen Hulme | 10th Oct 16, 3:44pm 1476067465

"One of the things that we feel very deeply is for our older customers who are reliant on bank deposits for their income, rates are getting really low," Hartzer was quoted as saying.

"Our estimate in NZ is people probably need interest rates around 4% to live on and that's getting really hard," added Hartzer.

Hmmmmm...

Nearly 7 in 10 Americans have less than $1,000 in savings Read more

Are Kiwis in a better position? - I doubt it.

Are they the collective non-saving owners of the O/N ~$148 billion bank liabilities earning fractions of 1.0% or less and in some cases nothing at all if an emergency withdrawal is made to pay an unexpected bill?

The remedy resides in higher interest rates which are symptomatic of a healthy, growing economy where all are entitled to a share of the nation's wealth rather than a minority in receipt of tight cheap bank credit collateralised by over priced residential property assets.

by KH | 11th Oct 16, 11:20am 1476138042

Yes Stephen. New Zealander are poor. One of the telling features is the number of funeral benefits WINZ has to give out. Apparently 25% of us die not leaving enough assets to bury us. I have been trying to source that factual basis of that statement but can't find it. Anybody has it ? If it's true, it means we are dirt poor.

by Hamish | 11th Oct 16, 9:39am 1476131989

Try this site.
https://www.fyi.org.nz/

by Casual Observer | 11th Oct 16, 10:38am 1476135528

KH Just because the deceased didn't leave enough to fund their funeral doesn't mean that their family couldn't. I know of a family were the last parent died with almost no assets - cash or otherwise - had an alcohol addiction. Three baby boomer children. Two of very modest means, one a very successful business owner - dysfunctional sibling relationships. None of the kids were prepared to use their own money for the funeral so they applied to WINZ for a funeral allowance. As the parent died with almost nothing they were given $1500 and that was the total cost of the funeral. The ability of family to pay for a funeral isn't considered - just what was the assets held at the time of death by the deceased.

by KH | 11th Oct 16, 11:24am 1476138257

For sure CO. Point remains that the percentage with nil assets is very high. Gives the lie to the assertions often made on this site that the oldies have all the money. But I do wish I could track down the actual percentage of deaths that WINZ has to pay for the proceedings. It's published, but I can't track it down.

by Come on | 11th Oct 16, 11:02am 1476136973

An oldie but a goodie

"I came into this world with nothing - and I've still got most of it"

by Come on | 11th Oct 16, 11:02am 1476136977

An oldie but a goodie

"I came into this world with nothing - and I've still got most of it"

by rpvr | 11th Oct 16, 7:38am 1476124685

We are forever being told that we need to save for our retirement. Younger wage and salary earners look at the return their grandparents are getting on savings, and think why the hell should we? The banking system worldwide is a shambles which nobody understands, let alone has any idea how to bring under control.

by KH | 11th Oct 16, 9:31am 1476131487

So just give up. That's clever not. Your grandparents are getting a sad level of return. Your plan is what ? No return at all. Homelessness looms in your future.

by Noncents | 11th Oct 16, 12:37pm 1476142646

Only if we listen to the advice of everyone saying keep your money in Kiwisaver.

Pull it out, get a house, pay it off. Best single thing you can do for your retirement.

by linklater01 | 11th Oct 16, 8:06pm 1476169586

Perhaps you should consider changing your non de plume to nonsense. You really want everyone to give up their annual subsidy on their KiwiSaver contributions and somehow put together the deposit required to buy even a very modest property. Since it almost certainly couldn't be in grossly overpriced Auckland,it would probably need professional management,reducing the net yield even further. Then as if my magic,it is to be paid-off. Actually,we would be better off as a country if more people stopped treating houses as an investment,but just somewhere to live in and made their retirement plans in an other medium. it's called diversification and is a beasic principle of investment for most people.

by Takere | 11th Oct 16, 2:11pm 1476148309

How about declaring where Westpac borrows from first? Why borrow @ 2% when their Australian parent bank borrows offshore at 0.00%? Wouldn't you have a line of credit? Yes they do.
I think he's talking BS?
The 90 rate is just a figure put up and if you're caught "short" and you don't want you're parent bank to discover your "faux pas" you'd borrow at that rate and then cut your interest (pass the loss onto customers at a lesser rate) rate to make up the loss/diff.
Rocket Science, its not?