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.
Wisely, the government publicly stated that it has no intention of raising the Age Pension age to 70 years, but, as previously announced by the former ALP government, the Age Pension age will be increasing to 67 years.
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|
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.