Raise in Pension Age to 70 All But Certain!
Recent data published by the Australian federal government has confirmed that the raising of the eligible pension age by five years from 65 to 70 would save the government $3.6 billion dollars over four years. However, such data does not take into account the taxable income that the government would be able to subsequently collect from those workers in that age bracket that are receiving an income, those most vulnerable who cannot afford to retire without needing to lean upon pension support. These influences would significantly increase the government’s windfall beyond $3.6 billion.
With such a proposal, there is has been no discussion on changing the date at which politicians can change access their aged pension, of which in 2025 will be a 60 years of age, quite a disparity for the remaining population who will have their pensions eligibility date increase from 2025 through to 2029.
Current life expectancy stands at 80 years for men and 84 years for women, meaning that the majority of the population will only receive a pension for roughly half the time that federal MPs will receive, and at least 10 years less that what MPs will receive.
These changes by the government were originally proposed in 2014, and have proven largely unpopular amongst those who are close to reaching retirement age. But what is driving such an initiative? Australia’s increasingly aging population is growing at a rate greater than that of what younger generations were required to support in the past, meaning that there is increasingly less funds to support Australia’s older generation with pensions. With this in mind, the majority of people recognise that changes to age pension eligibility must be completed, however there are many views on how this be best achieved.
Ian Yates, the chief executive from The Council On The Ageing Australia (COTA) said he was not opposed to increasing the pension age in principle, however has questioned the methodology of how it is being proposed by the federal government. “We note that more and more Australians are working well beyond 65 years,” Mr Yates said, “However COTA is opposed to increasing the age to 70 in the absence of a number of other measures.’’ Mr Yates has suggested that focus be given to other senior initiatives that support pensioner way of life, including employment support, and tax concessions, all of which are missing from the government’s recent proposal.
More debate on age pension eligibility is expected to plague the government over the coming weeks as awareness spreads throughout the community.