Should the pension age be changed to 70?
The eligibility age for the Age Pension will be set at 67 from next month. But already there are calls for it to be extended.
Key points
- From 1 July, the eligibility age for the Age Pension is 67 for all Australians.
- Researchers are pushing for the pension age to be increased to 70 by 2050.
- National Seniors opposes further age increases and suggests an alternative solution to workforce shortages.
For decades, Australian men could look forward to retiring at 65 and receiving the Age Pension. For women, the pension age was long set at 60.
But all that changed a decade ago, with the introduction of incremental rises in the pension age, taking it to 67 for all Australians, effective on 1 July 2023.
But it could have been – and still may be – worse.
The Rudd Labor government legislated that the pension age increase to 67.
But in May 2014, the then Treasurer, Joe Hockey, went one better announcing the pension age would rise to 70 by 2035. In doing so, he made the spurious claim that it was “highly probable” that a child born today would live to 150.
The move was based on a report from the Commission of Audit, which recommended the qualifying age be linked to life expectancy. The thinking was that because we are living longer than our parents and grandparents, we should remain in the workforce longer than them.
But there was a public backlash to the thought of waiting until 70 to receive the pension, including a campaign by National Seniors Australia.
A popular slogan at the time was: “Only a bloke who’s worked in an office his whole life would think you can work until you’re 70!”
Scott Morrison later officially dropped the age-70 target as Liberal policy. His deputy, Michael McCormack, said at the time that it was “probably a step too far”.
“I think if you are a tradie, or a brickie, or a shearer in rural and regional Australia you don’t want some suit in Canberra telling you you are going to have to work until you’re 70,” he said.
At National Seniors, we were pleased the government “backed away from the unpopular idea”, and called the decision “a win for common sense”.
On 1 July, all Australians will have the same retirement age for the first time in more than a decade – but there is no guarantee that that will be the end of the matter.
A group of academics have revisited the statistics and released a report saying that a further rise in the eligibility age will be warranted to ensure the country has a sufficient supply of workers into the future.
Macquarie University Business School Professor Hanlin Shang and his co-authors say there should be three more pension-age increases over the next 27 years. They suggest an increase to 68 by 2030, rising to 69 in 2036, and 70 by 2050.
Professor Shang says Australia’s low birth rate is one of the key factors impacting the number of workers who will be available to sustain an ageing population.
“Less people in the working group and more in retirement will make the old age dependency ratio (OADR) higher,” he said.
“What this means is there is less working people to support elderly people. And with more elderly people in the population, this will create a burden for the government pension system.”
The proposal is again attracting criticism, with one worker telling news.com.au: “Try and be a tradie at 70.”
A retired nurse added: “People in their 60s are exhausted. I’ve got back pain from nursing. I cannot work anymore. People should not have to work in old age.”
National Seniors has rejected calls for raising the pension age to 70. We know that many people exit the workforce because of ill health and simply cannot continue to work.
We have argued the best way to tackle declining workforce participation is to provide incentives to those who choose to work longer.
Our Let Pensioners Work campaign is calling for a reduction in the income test taper rates so a person can keep more of their pension if they choose to continue in the workforce.
This is a fairer way than raising the pension age because it rewards people who want and need to work.
Chief Advocate Ian Henschke recently told Radio 4BC that pensioners who chose to work would benefit from extra income and their participation in the workforce would also help the economy.
“If you are on a pension, you want to keep working, let them work and it’ll be a win for the economy, it’ll be a win for the pensioners themselves and it will be a win for the government,” Mr Henschke said.
