Age Pension age increasing to 67 years (not 70 years)

Note: This article explains the current Age Pension age. If you are seeking information on the retirement age for accessing superannuation benefits see SuperGuide article Accessing super: What is my preservation age?

Note: If you are seeking information on the changes to the Age Pension asset test announced in the 2015 Federal Budget, and taking effect from January 2017, then see the SuperGuide article 300,000 retired Australians to lose some or all Age Pension entitlements.

Your Age Pension age, that is the age at which you are eligible to apply for the Age pension, depends on your date of birth.

If you were born before July 1952, your Age Pension age is 65 years. If you were born on or after 1 July 1952, then your Age Pension age will be 65.5 years, 66 years, 66.5 years or 67 years.

The first shift upwards in Age Pension age will occur in July 2017 when the Age Pension eligibility age increases to 65.5 years, and then in six-month increments every 2 years, until it reaches the age of 67 years from 1 July 2023. See Table 1 below to discover your Age Pension age.

Background: The Liberal government wants to increase the Age Pension age to 70 years but has not received support from the ALP opposition or the minority parties. If the Liberals win the 2016 election, and secure a clear majority, they intend to increase the Age pension age to 70 years, in six-month increments (every 2 years) starting from July 2017, until it reaches the age of 70 years from 1 July 2035. If the Liberals were to be successful, then those born after December 1965 will have an Age Pension age of 70 years.

Note: The key difference between the current laws and the proposed changes suggested by the Liberals is the maximum Age Pension age. Under the current laws the maximum Age Pension age is 67 years, while the Liberals want to increase it to 70 years. The proposed Liberal changes affect those born on or after 1 July 1958. Under the current laws (and under the changes proposed by the Liberals), the Age Pension age remains at 65 years for those born before July 1952, and progressively increases to 67 years by 2023. Under the current laws, the Age Pension remains at 67 years into the future while under the Liberals proposed changes would continue to increase the Age Pension age for those born after June 1958. The Age Pension age would increase until it reached 70 years for those born on or after 1 January 1966. (For the background on this unsuccessful proposal by the Liberals, refer to the summary later in this article.)

Just for the record, in my view, suggesting raising the Age Pension age beyond age 67, while ignoring that mature age employees struggle to obtain work, and many Australians are not physically able to work full-time until age 70 or even until late-60s, 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.

For anyone born after June 1952, your Age Pension age will be older than 65 years under the current laws. See Table 1 below to work out your Age Pension age.

What is your Age Pension age?

If you were born before July 1952 then your Age Pension age is 65 years (and younger for women born before 1949). If you were born after June 1952, then your Age Pension age depends on your specific date of birth.

What is your Age Pension age?
Commencement date Age Pension age Affects people born
65 Born before July 1952
From 1 July 2017 65.5 From 1 July 1952 to 31 December 1953
From 1 July 2019 66 From 1 January 1954 to 30 June 1955
From 1 July 2021 66.5 From 1 July 1955 to 31 December 1956
From 1 July 2023 67 On or after 1 January 1957

Source: Adapted from information on Centrelink section of DHS website.

Why is the Age Pension age increasing to 67 years?

The increase to the Age Pension age was debated several years ago by the former Liberal Howard Government but shelved due to its political sensitivity. The arguments that the former Labor Government used to justify the increase in eligibility age for the Age Pension to 67 years were:

  • 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 SuperGuide article Retirement: Can Australia afford to support your lifestyle?

How does your Age Pension age affect your retirement plans?

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 currently 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 currently eligible for a part Age Pension. From 1 January 2017, the Age Pension assets test is becoming stricter, which means a couple will be able to own just over $800,000 in assets (in addition to the family home) before losing the Age Pension entitlement (for more information on this change to the Age Pension assets test see SuperGuide article 300,000 retired Australians to lose some or all Age Pension entitlements )

Australians retiring today 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, and will then steadily increase by six months every two years, until it reaches 67 in 2023.

Background: Proposed changes to Age Pension age

If Liberals win the 2016 federal election and have a clear majority in both houses of parliament, then expect the Age Pension age to increase to 70 years.

In May 2014, the federal treasurer Joe Hockey announced that the Age Pension age will increase to age 70 by year 2035, and confirmed this fact in the 2014 Federal Budget. The Age Pension age is the age at which you can claim the Age Pension.

What this would mean in practical terms is that those born after 1965 can only claim the Age Pension from the age of 70. Anyone born before July 1952 has an Age Pension age of 65 (or if a woman, younger than 65 in some circumstances). Anyone born after June 1952 but before January 1966 will have an Age Pension age somewhere between age 65 and age 70. See table later in the article to find out your Age Pension age under the proposed laws (note that these changes have no chance of becoming law with the current parliament).

The proposed legislation (that is the Social Security and Other Legislation Amendment (2014 Budget Measures No 2) Bill 2014), was knocked back in the Senate by the Palmer United Party.

Note that the federal government’s proposed changes are more aggressive than the recommendation made by the National Commission of Audit (click on link for retirement-related recommendations of NCOA). The NCOA recommended that the Age Pension age increase to age 70 by 2035, while Hockey proposed that the Age Pension age increases to age 70 by 2053. (At the time of the NCOA report release, I mused if 2053 was a typo in the NCOA report).

For details of your Age Pension age under the Liberals proposals, see Table 2 below.

Another broken promise by the federal government: Note that 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 then announced that the Age Pension age will increase to 70, and confirmed this fact in the 2014 Federal Budget. The Liberals however, were unsuccessful in getting these changes through parliament. The Government’s backtracking on election promises was also partly triggered by a Productivity Commission report, as well as Australia’s longevity demographics. In late November 2013, the Productivity Commission released a report about the ageing population of Australia and recommended the Age Pension age increase to 70 years. A word of warning: this same report also recommended that retired home-owners should be forced to access the equity in their home to pay for health costs!

What is your Age Pension age (under the Liberal government proposals)?
Commencement date Age Pension age Affects people born
65 Born before July 1952
From 1 July 2017 65.5 From 1 July 1952 to 31 December 1953
From 1 July 2019 66 From 1 January 1954 to 30 June 1955
From 1 July 2021 66.5 From 1 July 1955 to 31 December 1956
From 1 July 2023 67 From 1 January 1957 to 30 June 1958
From 1 July 2025 67.5 From 1 July 1958 to 31 December 1959
From 1 July 2027 68 From 1 January 1960 to 30 June 1961
From 1 July 2029 68.5 From 1 July 1961 to 31 December 1962
From 1 July 2031 69 From 1 January 1963 to 30 June 1964
From 1 July 2033 69.5 From 1 July 1964 to 30 December 1965
From 1 July 2035 70 From 1 January 1966 onwards

Source: Table is the copyright of Trish Power and cannot be reproduced without express permission of SuperGuide and Trish Power. Table created from media transcripts, 2014 Federal Budget and some information published on Centrelink website (www.centrelink.gov.au).

Simplistic solutions distract from ageing population issues

Lifting 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 close to reckless by the federal government, and 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.

Note that the National Commission of Audit has recommended increasing preservation age (age that you can access your super) to 62 years rather than 60 years, and eventually increasing it to 65 years, so it follows the increase in the Age Pension age, but 5 years’ earlier.

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.

Under the current Age Pension age rules

In summary, your Age Pension age is:

  • 65 years if you were born before July 1952
  • 67 years if you were born after December 1956
  • Between 65 years and 67 years if you were born after June 1952 and before January 1957. For birth dates and Age Pension ages between these two key dates, see Table 1 near the start of this article for your Age Pension age.

Under the changes proposed by the Liberals

Under the Liberals proposals, your Age Pension age would be:

  • 65 years if you were born before July 1952
  • 70 years if you were born after 1965 (subject to legislation)
  • Between 65 years and 70 years if you were born after June 1952 and before January (subject to legislation). For birth dates and Age Pension ages between these two key dates (subject to legislation, and a federal election), see Table 2 near the end of this article for your Age Pension age.

IMPORTANT: SuperGuide does not provide financial advice. SuperGuide does not answer all questions posted in the comments section. SuperGuide may use your question or comment, or use questions from several readers, as the basis for an article topic that we publish on the SuperGuide website. We will not disclose names or personal information in these articles. 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. Both my husband and I work hard and both our jobs are low income and are physically demanding. We are now both into our late 50s and the signs are beginning to show. We don’t know how our bodies will hold out until we retire. People who have physically demanding jobs will not be able ti enjoy the last few years of their retirement at such a late age in life. My husband will have to work until he is 66.5 and I have to work until I am 67.5. If either of us had an office job we might be able to last the distance but I can’t see someone who has been a brick layer, construction worker, council worker, gardener, nurse, cleaner etc who have worked all their lives at this profession keep it up into their late 60s! We don’t have nearly enough to retire on yet we have worked hard for the little we have. Our future does not look good for our golden years ahead.

  2. No matter how much political correctness is thrown around the outcome is still the same for anyone over 50. It’s really difficult to show how much experience you have on a resume when you have to leave off a good portion of your working life to appear as a much younger person. To dare to be brave and actually show your entire work history is madness as the 20 or 30 year old looking at your resume would instantly bin it. Anyone 60 and older is expected to drop off the perch and give up their job anyway so it all seems ridiculous.
    Being over 50 it’s difficult to get an interview. One time I was lucky and got an interview and the job but was treated like dirt. The owner would come in and ask me if my heart was ok because he didnt want me having a heart attack at work. When the pornography started appearing on my computer and I complained to the manager the treatment got worse and I actually put up with it because I didnt want to get into trouble from Centrelink for leaving a job. Eventually I was fired and I can honestly say after first being upset for not having a job I was elated because I no longer had to work somewhere I was not respected.

  3. I agree with Sam. I have worked very hard for 40 years paid my taxes and have to wait till 66 to receive some pension. why is that people who came in the 70’s from overseas returned to their country after they received their australian passport. Worked for 25 years in their own country and have returned to Australia age 65 to receive Australia pension and public hospital services. Never contribute to paying taxes. How is this fair? What is the government going to do?

  4. Mimi Nguyen says:

    My dad is always on my back about my income. He is so adamant that I must always take the right steps to prepare for retirement. I am only 24! Retirement is a long way away for me. But with the state of the government, and the new policies being outlined within the Intergenerational Report (IGR) I can understand why he would be feeling this way. I imagine the effects of the increased retirement age have touched the lives of millions of Australian families. The IGR fails to take into account the fact that many Australian families are multigenerational families, with each generation working to support each other financially; any policy that affects one generation within a household affects everyone in that family (Bainbridge, 2015).

    The content within the 2015 Intergenerational Report and the media surrounding it, are such a misrepresentation of the financial hardships of working Australian families (Kelly, 2015). The current government has continued to stubbornly push their unpopular political agenda; in their sad effort to pull the wool over the eyes of working Australians. A large part of the IGR talks about the aging population and the implication it will have on the age that workers go into retirement. A proposal in the IGR explains that pension eligibility is set to move from 65 to 70 by 2035 (Commonwealth of Australia, 2015, p. 18). Much of the reasoning is based in the notion that the life expectancy of the average Australian is increasing, with the male life span increasing from 91.5 to 95.1 and the female lifespan increasing from 93.6 to 96.6 in 2055 (Commonwealth of Australia, 2015, p. 5).

    But does this relatively small increase in life expectancy really justify the retirement age pushed to 70? Coming to the end of their life, the proposed policy does not provide many options for those who, for no fault of their own, cannot physically continue working. Regardless of the increase in life span, the quality of life, and function of those in their twilight years are much more limited towards the end of life (Glenday, 2015).

    The IGR outlines that technology will drastically affect our way of living and the way that we perform work. In a presentation given by the treasurer about the IGR, Joe Hockey stated “I urge people to go and do an internet search of driverless cars. There is credible evidence that suggests that by 2040 three-quarters of the cars on the road will be driverless” (Martin & Massola, 2015). He went on to explain how automation and the advent of technology would work to drastically affect our production. However, with the aging population, there is danger that this mentality will only create a situation where older, less physically able workers are marginalised in favour of much more efficient automated practices – creating a situation where, like in my own family, older generations are fearful to change their vocation to go into a job market where their skills are obsolete (Glenday, 2015; Martin & Massola, 2015).

    Every fortnight the government takes a percentage Super Guarantee from my pay check in order to prepare for my retirement. Meanwhile, almost at the age of retirement themselves, my parents struggle to physically hold on as they are not able to receive the pension and yet, cannot afford to quit. This creates a compound problem as the younger generation works to support their parents by living at home and caring for the elderly, thus draining funds that would otherwise go towards building the next generation. All of this together creates a very difficult situation where one generation in the house will have to suffer in order to support the other (Bainbridge, 2015; Kelly, 2015).

    The 2015 Intergenerational Report fails to consider this compound problem raised when the proposed policies are applied to multigenerational families. If there is an answer to our money problems within the family, it does not lie with the traditional forms of investment.

    Word count: 523
    References
    Bainbridge, A. (2015, March 14). Intergenerational Report a dishonest weapon of the 1%. Retrieved March 17, 2015 from https://www.greenleft.org.au/node/58518
    Commonwealth of Australia. (2015). Intergenerational Report 2015: Australia in 2055, The Treasury: Canberra. Retrieved from http://www.treasury.gov.au/~/media/Treasury/Publications%20and%20Media/Publications/2015/2015%20Intergenerational%20Report/Downloads/PDF/04_Chapter_1.ashx
    Glenday, J. (2015, March 5). Intergenerational Report: Older Australians and women need to be encouraged to work more. Retrieved March 20, 2015 from http://www.abc.net.au/news/2015-03-05/intergenerational-report-to-be-released/6281598
    Kelly, E. (2015, March 5). Intergenerational Report predicts long, hardworking life for Canberra baby Edgar. Retrieved March 20, 2015 from http://www.canberratimes.com.au/act-news/intergenerational-report-predicts-long-hardworking-life-for-canberra-baby-edgar-20150305-13w53c.html
    Martin, P. & Massola, J. (2015, March 7). Intergenerational report: Grey army marches to our rescue. Retrieved March 24, 2015 from http://www.smh.com.au/federal-politics/political-news/intergenerational-report-grey-army-marches-to-our-rescue-20150306-13wn0y.html

  5. I have worked most of my life. I am a female 60 years of age. I have paid my taxes. Why do I have to work til I’m 66 before I receive any pension. There are so many young people looking for work but can’t find any. They are being paid the dole. Why cant we, who have worked so hard all our lives give these young ones our jobs so that we can retire and enjoy the rest of our lives and our grandchildren before we die.

    • Yes the government is looking at the wrong end of the pole, I agreed with you once these young people start late to find a job they end up lazy for not having early training to work and they need more money than the older ones do such as buying stuff for a home and holidays, new family’s etc. The older ones is health and get very tired and worn out needed holidays and time in their life due to slowness only about one percent probably lucky to able to race around like a twenty yr old geez I am not impressed with these government are cutting right across the board to have less staff work underpaid and overwork with out butt on fire not funny these days so un real I wished these pollies would cut their priveleges of their gold cards and free plane trips 5 in a year its discusting

    • Sam I agree with your comment entirely. My theory is that the government is making us work longer before we are entitled to the pension in the hope that we work ourselves to death and then that saves them from paying us a pension at all. It all comes down to the almighty dollar! There are plenty of unemployed people out there whom we as taxpayers are supporting and working late in life to prevent them from getting the jobs we have no choice but to hold on to. Therefore I don’t agree with our government when they are talking about us baby boomers and not being able to afford our pensions because there wouldn’t be enough people in the work force to pay enough taxes to cover it. I’ll bet my last dollar that there will still be high unemployment when I finally retire but there could be less unemployment if the older Australians in the work face handed their jobs over to the younger ones. This would not only give the next generation employment, but a chance to build up a healthy super fund for when they retire as well and it would be less of a drain on tax payer’s money having to fund unemployment benefits.

  6. Dole O'Dole says:

    Well I am 50 years old and have been doing the Centrelink hokey pokey for 3 years and guess what ?? I can’t get employment. I have all the training and experience to do Office Admin work but they all say no thanks we want younger worker. Thanks Mr Abbot you have made the next 20 years for me look like hell.
    Older workers are not wanted in this country … unless you have a dirty rag and spray bottle to wash car windows.

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