The Association of Superannuation Funds of Australia (ASFA) is urging policy makers to look at a range of factors when considering an increase to the qualifying age for the Age Pension, in light of the suggestion from the Productivity Commission that this be increased to 70 to accommodate the economic implications of Australia's ageing population.
ASFA CEO Ms Pauline Vamos says, while increased longevity and pressures on future government expenditure were important considerations, other social and health-related factors must be taken into account when considering any further changes to the qualifying age.
"Many people reaching their late 60s and early 70s are either unable to work at all, or can no longer perform the roles they have been working in, due to physical or mental health-related concerns. While retraining these workers is good in theory, the reality is a lack of jobs for older workers would most likely see many individuals in this age group forced to apply for the Newstart Allowance in order to survive.
"In addition, any decision to further increase the eligibility age for the Age Pension should not be taken for another decade, when it will be clearer what the health status of older workers is, and what the job prospects are for them. To announce an increase now would be unfair to older Australians and would lead to less confidence in Australia's world-renowned system of providing retirement incomes."
Ms Vamos says such an increase could also potentially push people in their late 60s onto the disability pension, the cost of which should be taken into account by policy makers.
"At present, a large proportion of individuals who move onto the full Age Pension at age 65 have previously been on the disability pension. It's likely that if the Age Pension qualification age were increased, then more individuals in their late 60s would end up on the disability pension, as opposed to being in work, therefore reducing the intended effect of the policy."
Ms Vamos says it's also important that any large-scale changes to the welfare and superannuation systems be made in a broader context of how we should design these systems to accommodate the challenges posed by an ageing population.
"Pulling one lever in the system often upsets the Australian community, and can lead to adverse consequences, as people change their behaviour to reduce the impact of the change. This is why we continue to urge policy makers to take a long-term, holistic view of the future design of our welfare and superannuation systems, and consider policies that will deliver the best retirement outcomes to all Australians."
According to ASFA, there are a number of policy areas where more positive changes could be made in order to decrease future reliance of individuals on the Age Pension.
- supporting job options for older workers by providing training and support, and also encouraging employers to take on older workers
- boosting the retirement savings of individuals by increasing the Superannuation Guarantee to 12 per cent and by maintaining the Low Income Superannuation Contribution (LISC), which boosts the retirement savings of low-income workers
- continuing to provide meaningful tax concessions for superannuation contributions, and allowing flexibility in contribution caps to allow people, especially women, to catch up in their retirement savings when they can.
"Such policies have the potential to boost retirement savings, which will help governments now and in the future when it comes to ensuring all Australians have an adequate income to live a comfortable retirement," Ms Vamos concluded.
For further information, please contact:
Lisa Chikarovski, Media Manager, 0451 949 300.
ASFA is the peak policy, research and advocacy body for Australia's superannuation industry. It is a not-for-profit, sector-neutral, and non-party political national organisation, which aims is to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.