The Institute of Actuaries of Australia has called for an increase to the age pension age as part of a submission to the Government that seeks to rationalise existing access and eligibility rules while encouraging older Australians to support themselves financially for longer.
Responding to an invitation from the Department of Families, Housing, Community Services and Indigenous Affairs for the public to participate in its Pension Review, the institute has highlighted that the age pension (for males) has not changed in 100 years.
“Now, as life expectancies and general health and capacity to work at older ages increases, and the workforce ages, it is time for Australia to adopt a more dynamic approach which links pension age, life expectancy, health and capacity to work,” the 40-page submission stated.
“The first step in such a change could be for Australia to gradually raise the age pension age from 65 to 67 between 2025 and 2032.
“An early announcement of this change would minimise the impact on Australians already nearing retirement.” The institute suggested Australia was lagging behind the rest of the world in this area, with the US, UK, Germany and Denmark already moving their age pension age to 67 or 68.
The benefits of such a reform, according to the institute, would be to erode preconceptions about when workers are ‘too old’ to work, increase workers’ superannuation savings for retirement and improve the long-term sustainability of the Australian retirement income system.
The institute has also suggested the Government consider introducing the option of a deferred age pension and extend the asset test exemption to include home equity release schemes that meet retirement and health costs.
