Take note: Age Pension age increasing to 67 years

Note: This article below explains the eligibility age for the Age Pension. For information on the retirement age for accessing superannuation benefits see SuperGuide articles Preservation age: I’m 58. Can I withdraw my super benefits? and I’m 60. Why can’t I access my super benefits?

In late November 2013, you may have read about a proposal to raise the Age Pension age to 70 years. The proposal formed part of a Productivity Commission (PC) report about the ageing population of Australia. Another proposal within this PC report was to force retired home-owners to access the equity in their home to pay for health costs.

Although prior to the September 2013 Federal Election, the Liberals publicly stated they had no intention of pushing the Age Pension age to 70 years, it seems that pre-election promises count for nothing. The government has hinted that it may well increase the Age Pension age to 70, but note that it is likely to hit those born after July 1952, or perhaps those born after 1956.

Note: As previously announced by the previous Labor government, the Age Pension age will definitely be gradually increasing to age 67, but only for those born after a certain date (see table below).

The Age Pension age is the age at which you can claim the Age Pension, and it will be gradually increasing to 67 years. Depending on your date of birth, your Age Pension age may remain at 65 or it could increase to 66 or even 67, or somewhere in between. You can find out your Age Pension age later in this article.

Just for the record, in my view, suggesting raising the Age Pension age further while ignoring that mature age employees struggle to obtain work, and many Australians are not physically able to work full-time until age 70, is a simplistic solution to a more complex social issue. I provide a more detailed opinion on this issue at the end of this article.

Lift in Age Pension age for those born after June 1952

Four years ago, in the May 2009 Federal Budget, the Government announced that the Age Pension age is set to increase to 67 years of age from 2023. Until recently, this major change had disappeared from the front pages of newspapers. It should remain ‘top of mind’ for most Australians thinking about retirement.

For the majority of Australians, the Age Pension will remain an important component of any retirement plan, even when an individual has substantial superannuation and non-superannuation savings.

Around 80% of Australians who have reached Age Pension age receive a full or part Age Pension. Some couples who hold more than a $1 million in assets (in addition to the family home) are eligible for a part Age Pension.

Currently, Australians can access the Age Pension at age 65 (for men) and since July 2013, from age 65 for women. The Age Pension age for women used to be 60 years but has steadily increased to 65 years, in line with the Age Pension age for men.

Note: The Age Pension age will then remain at 65 for anyone born before July 1952.

The lift in Age Pension age applies to all Australians born after June 1952. Your retirement planning will be affected if you were born after June 1952, and you’re expecting to receive a part or full Age Pension on retirement.

Gradual increase in Age Pension age from 2017

The first shift upwards in Age Pension age will occur in 2017 when the eligibility age increases to 65.5 years, and then in six-month increments every two years, until it reaches the age of 67 in 2023 (see table below).

Note: The Service Pension qualifying age is to remain at the current level of 60 for men. For women it is progressively increasing to 60 by 1 January 2014.

Background: The increase to the Age Pension age was debated several years ago by the former Liberal Government but shelved due to its political sensitivity. The arguments that the former Labor Government used to justify the increase in eligibility age are:

  • Age Pension age has not increased above 65 years since its inception in 1909.
  • When the Age Pension was introduced, a male retiring at age 65 spent, on average, 11 years in retirement. At that time, around half of the male population reached retirement age.
  • Today over 85 per cent of the male population reaches retirement age and then can expect to spend, on average, more than 19 years in retirement.
  • This change is consistent with international trends: The United States, Germany, Iceland, Norway and Denmark currently have, or are moving towards, retirement ages of 67. The United Kingdom is increasing the Age Pension age to 68.

I explain the context for this fundamental shift in retirement incomes policy in more detail in the article Retirement: Can Australia afford to support your lifestyle?

Age Pension age for those born after June 1952
Commencement date New Age Pension age Affects people born
1 July 2017 65.5 From 1 July 1952 to 31 December 1953
1 July 2019 66 From 1 January 1954 to 30 June 1955
1 July 2021 66.5 From 1 July 1955 to 31 December 1956
1 July 2023 67 From 1 January 1957 onwards

Source: Table created from information published on Centrelink website (www.centrelink.gov.au)

Simplistic solutions distract from ageing population issues

Suggestions to lift the Age Pension age further, beyond age 67, causes unnecessary anxiety for our older workers, while ignoring that mature age employees struggle to obtain work, and many Australians are not physically able to work full-time until age 70. The recent suggestions contained in the Productivity Commission report, are simplistic solutions to a more complex social issue.

Further, increasing the Age Pension age won’t resolve the issue of rising health costs, which is a greater budgetary cost, and a greater problem than Age Pension costs. Making such announcements without offering supporting policies to transition older workers into a new world of working longer in meaningful employment is simply grandstanding by the organisations making these suggestions. It also causes unnecessary anxiety for a generation (particularly for women) who have not had access to superannuation for much of their working lives. In the case of older women, many have not had access to an income (or worked when women were paid only half of what mean earned). Many more women have had limited work experience for much of their lives, due to raising families.

In a related matter, an Australian think tank, the Grattan Institute, has come up with another simplistic suggestion that the government should raise the preservation age (age at which you can access your super), and the Age Pension age to 70 years, to balance the budget. The same think tank reckons your family home should not be exempt from the Age Pension assets test – not sure where they think Australia’s retirees are supposed to live. Why do economists (I confess to also holding such a qualification) so often treat the family home solely as an economic asset, notwithstanding there may be a minority of Age Pensioners who live in million-dollar homes while accessing the Age Pension.

Talk about picking the low-hanging fruit. What about offering some insights into flexible workplaces for parents and older workers, and carers? Purely economic solutions are pointless without providing the infrastructure and social support necessary for fundamental economic and social change. Yes, we are living longer. If those longer lives are healthier, then, in most cases those healthier lives are due to life-saving heart and blood medication, joint replacements, transplants, and cancer treatments and other procedures. Perhaps we need to work out ways to tackle the rising costs of health care, and budget for them, while ensuring that we develop solutions that are acceptable for the Australian population – both young and old. I want our older generation to be able to afford quality healthcare, as well as to be able to live comfortably.

Interested in your views on this issue – feel free to offer your views in the comments section at the end of the article. Anyway, back to superannuation…

In summary, your Age Pension age is 67 years if you were born after December 1956, and your Age Pension age is 65 years if you were born before July 1952. For birth dates between these two key dates, see table above for your Age Pension age.

© Copyright Trish Power 2009-2014

Copyright for this article belongs to Trish Power, and cannot be reproduced without express and specific consent.


IMPORTANT: SuperGuide does not provide financial advice. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Readers need to seek independent advice about their personal circumstances.

Comments

  1. So this is basically a spending and revenue issue, with Governments all over the world claiming we don’t have enough income to support retiring populations. This a massive lie pushed by all sides of politics, remember, if you tell a lie often enough people will eventually believe it. The taxation and financial system is chronically dysfunctional and inefficient. It can be simplified and restructured to supply the Governments with more than enough money to spend where it should be spent. Areas of the economy that are basically unproductive have avoided paying their fair share of taxes for decades, ie speculative, and other sectors far too much. One example is introducing a debits and transfer tax to replace all other taxes, including income tax, thereby taxing things such as currency speculation, share market speculation. This tax could be levied at a much lower rate than the current part GST as it is levied on all debit/transfer transactions. As the money supply is always increasing the income for the Government would also increase. Governments don’t do this of course as the they receive most of their political donations from companies/business that benefit from the current system.
    The other issue at stake is why punish people who will have no income instead of asking those who do have an income to contribute, such as eliminating family tax benefits. I personally know of families who live way beyond their means and survive through taxpayer handouts. This proves that economic policy is based solely on political ramifications.

  2. garth kiddell says:

    the next generation by all accounts will not live longer than the previous , many wont make 70, they are over weight , drink to much, eat to much junk food , smoke to much , excerse little,
    way to go, still they wont live long with kidney disease , heart disease etc increasing,
    many people arnt living longer as the government states if you call sitting as vegetable in a wheel chair living so be it , but i dont . doctors are dragging the life on of people
    who should not be really alive, its a issue of quality of live , which they have lost

  3. I think the government need to look at other options.I think Newstart & single parent pensions should be a safety net,not a way of life for people.Perhaps a 2 year maximum on these payments & then after that it becomes a repayable debt,just like uni students have a HECS debt after years of study.You can still access the benefit longer if needed,but knowing you will eventually have to pay that money back might encourage people to get a job sooner,rather than later.

  4. Roxanne Scott says:

    I have worked part-time since age 15 and full-time for the past 35 years, often two jobs or studying while working. I have only claimed unemployment benefits for a few months after uni and have not claimed any other welfare. I have donated to charities very regularly and have paid taxes to help support the less fortunate and the non-workers. I also pay huge private health premiums and if I need hospital cover, I will have huge ‘gap’ fees. Electricity, water, rates and telecommunications fees are now close to extortionate. My elderly mother is in a government hospital and to visit her daily the (almost empty) car park fees are also ridiculously high. I will never claim a pension from the government as I don’t qualify but just when I think I can access my superannuation for a well-deserved break, it looks like the rug is going to be pulled from under me and I’ll have to wait another 10 years. If I had my time again, I’d be a beach-bum on welfare. Or a politician – they only have to work 8 years to get a pension I believe!

  5. Michelle Lidbetter says:

    The government is quite happy to take my tax money to spend but not on me! Politicians pensions are collectible straight away. Why should I have to continue working to an every changing pension age when I have not been consulted! A least I’m working …. So maybe I should dump my job, drink and take drugs and get everything given to me free??!!!

  6. There is no reason to have a one size fits all retirement age. People in manual professions need to retire earlier. My plumber for example is planning to retire this year (age 67) as he says he is starting to forget things and not do things in the right order. He says it wont kill anyone, but he likes doing things properly and it is time to go. He is not filthy rich by any means, and needs the government pension, which is only fair given the amount of taxes he has paid in. What people dont realise is that self employed tradesmen pay a lot of tax some years, some years very little due to illhealth (my plumber had undiagnosed glandular fever for about 18 months).

    I on the other hand am a self funded retiree and retired at 55. I plan not to have any superannuation, living on investments and savings, so will be in the same situation as any other worker, paying normal taxes based on income. I think that is fair in my case as I can afford it. It should really be based on the correct incentives to save, and then at the end a more granular approach to when and with how much one can retire.

  7. It makes me sick to think that the government will pay women $75,000 to have a baby regardless of how much they earn. Surely common sense prevails as to where this money could be better spent. In my day when we had children we either left the workforce and only received a small allowance. The baby boomers are the ones who got nothing and now have to suffer to give to the rich who don’t need it. I have just lost my job at 61 and to try and find another one is going to be hell even though they say “experienced” workers are still wanted and employable…ha!!!! I like a lot of others have health issues and would love to retire in a couple of years, I can’t get a disability allowance because my husband works and we have savings put away for retirement….the system sucks big time. I know some people want to work past 65 and good on them but in todays society surely we should be able to make a choice. I feel like a second class citizen, I have worked for most of my adult life, paid copious amount of tax and now am being denied a few good years of retirement to enjoy life.

  8. There will more depression among older Australians. Looking for work over 50 is almost impossible. To front up as a jobseeker after 65 will be so depressing. As a post 50 woman who doesn’t have a career, has been a full time mother, wife and carer of elderly parents where can I find work? I enquired about courses as I am willing to learn new skills but was told I am not aligable as my husband works. Go figure!

    • Hi Mimi you could apply to be an aged carer as you have experience looking after your elderly parents. The course is good and is government funded, you could also apply to do home care. The hours are flexible so if you only want to work part time it is perfect.

      • government dont have to worry they can retire at whatever age 40 what ever and will still get their hefty pension when will this be seen as an issue why when they are doing a job just like the rest of us not have to wait till they are 67, See how they like that??

  9. How about the Government spend less on themselves and their superannuation & pay rises AND our taxes paying for them after they have left their job for years on end.
    How about some of the taxes we pay actually go towards some benefit to us in our old age. I was supposed to retire at age 55 – I’ve now got another 12 years. Most of us will be on our walking frames going to work.
    When do we get to sit down and enjoy what should have been our retirement and if we wanted to continue part time work, that was our choice.

    • When was the retirement age 55?

      • Margaret says:

        When I was young, retirement age for women was 55 and 60 for men. It was an era when women were the fragile sex and men continued to work to provide their needs as they had done through most of their marriage. Women were considered scandalous if they returned to work after marriage. Indeed, working women should be single in order to not take jobs from others, my aunt told me. She had never married and resented married women who had a man to look after them applying for positions. This was the 60′s & 70′s and jobs were tight. I guess most of the baby boomers were hitting the job market all at once. Sadly, it was common at the time for men who had no other role than provide for their family, to die within weeks of retiring and young widows of 50 – 60 became pensioners by default. They cured that anomally by planning for an active retirement! Now, people resent those who retire early, and even more if they are active ( spending the kids inheritance.) lol what a crazy world. My retirement age keeps escaping me, divorce has meant lean savings and my parents are still living off their savings. I will need to reach 66.4 at the moment. Of course, changes are due in ’17, so wait for the amendment. Thankfully, using their life expectancy chart, and genetic health problems, I should retire seconds before I drop dead!

  10. I suspect that those on a full govt pension will not feel any pain from Budget changes. It is those like myself having an income stream from superannuation savings plus a top up part govt pension. The dollar amount of the pension may stay the same, but the reduction due to income and assets may be affected by changing thresholds. Expect the Budget to change the assets test reduction from $1.50 for every $1000 in excess assets to $2.50 for every $1000. Then they can still say that the pension did not change, only the thresholds for those who have other income streams.

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