In the third of a series of articles focusing on possible changes to retirement income policy in the Federal Budget 2016/17, this week we look at pension age. There are three numbers that are important in the debate about Age Pension age: 65, 67 and 70.
These represent the current Age Pension age, the legislated increase and the Federal Government’s preferred policy delivered in Budget 2015, but still to be legislated.
The current rule
So what will happen in this year’s budget? It’s a subject on which the Turnbull Government has been very quiet – but it is worth remembering that the legislation from the Federal Budget 2015/16 to move the qualifying age for the Age Pension to 70 by 2030. From 1 July 2017, the current age of 65 will gradually increase to 67 by 2023, as a result of legislation passed by the Gillard government in 2009.
All is quiet on the Western front! The Turnbull Government has not highlighted pension age; one assumes because the legislation to raise it to 70 is still on the table. The Labor Party supports the current age of 67.
There goes retirement! Just when you though 45 years of hard work and paying taxes meant you qualified for a part Age Pension and a little bit of ‘you’ time and boom! Age Pension age is increasing from 65 to 67 and 70 appears well and truly on the horizon. As we have already suggested, a move from 67 to 70 will be fine for those workers who depend on their knowledge rather than their physical fitness to do their daily work. Those who are employed in physical labour may be caught out by their ability to continue to lug heavy equipment, make beds, lift patients – even lift a hairdryer after 50 years of this repetitive action.
For such workers, 67 is probably quite old enough, while those who work on computers might feel comfortable and capable to continue into their 80s. So what is fair? We asked our members in our most recent Insights survey in January this year, what they felt was the most appropriate age at which to receive an Age Pension – and 65 was the clear preference with 63 per cent confirming this was the appropriate age at which to receive this retirement income support.
Whilst supporting the clear preference of our members, for now, we do believe that there is need to increase the Age Pension age in line with longevity as happens in Denmark. This can be a gradual measure and can be introduced AFTER some other much needed reforms are achieved. And what would these be? Such reforms would call for more age friendly work places, for a concerted effort to reduce the 483 days that those over 55 currently spend out of work (compared with 284 for younger workers) and for a more robust age discrimination mediation process so those older Australians who can’t get work don’t simply give up – they get up and fight, with the support of the Australian government.
Working to 70 is a pipe dream
What do you think? Should the entitlement age for the Age Pension be raised from 67 in 2023 to 70 by 2030? What is your experience of the right to a pension?