- Another broken promise by the Government
- Age Pension age already increasing to 67 years
- Lift in Age Pension age for those born after June 1952
- Gradual increase in Age Pension age from 2017
- Why is the Government increasing the Age Pension age?
- What is your Age Pension age?
- Simplistic solutions distract from ageing population issues
Note: This article (including table) explains the Age Pension eligibility age, which has jumped by 5 years for younger Australians. If you are seeking 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 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 means 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.
The announcement by Joe Hockey is 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 2053, while Hockey has announced it will increase by 2035. (At the time of the NCOA report release, I mused if 2053 was a typo in the NCOA report).
In 21 years’ time (by 2035), those Australians born after 1965 will be eligible for the Age Pension when they reach the age of 70. If you were born in the year 1965 however, then your Age Pension age is 69.5 years (see table below for more details).
Another broken promise by the 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 has since announced that the Age Pension age will increase to 70, and confirmed this fact in the 2014 Federal Budget.
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!
Age Pension age already increasing to 67 years
As previously announced by the previous Labor government, the Age Pension age was already gradually increasing to age 67, but only for those born after a certain date (see table below).
Depending on your date of birth, your Age Pension age may remain at 65 or it could increase to 66 or 67, or 68, or 69 or 70 years, 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 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.
Lift in Age Pension age for those born after June 1952
Five 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.
This year, in early May 2014 and confirmed on 13 May 2015 in the 2014 Federal Budget, the Age Pension age will increase to 70 years of age from 2035.
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.
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.
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).
The Age Pension age will continue to increase in six-month increments every two years until Age Pension age reaches 70 years from 1 July 2035 (see table below).
Note: I am not aware that the Government has made any announcement about the Service Pension age for the benefits paid to veterans. Until we hear otherwise, we have to assume the Service Pension qualifying age is to remain at the current level of 60 for men, and since 1 January 2014, 60 years for women. Having made this statement, there is a strong likelihood that Service Pension age will increase over time.
Why is the Government increasing the Age Pension age?
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 2011 SuperGuide article Retirement: Can Australia afford to support your lifestyle?
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. See table below to discover your Age Pension age.
|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||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.
Feel free to offer your views in the comments section at the end of the article. Anyway, back to retirement planning…
In summary, your Age Pension age is:
- 65 years if you were born before July 1952
- 70 years if you were born after 1965
- Between 65 years and 70 years if you were born after June 1952 and before January. For birth dates and Age Pension ages between these two key dates, see table above for your Age Pension age.
Copyright for this article belongs to Trish Power, and cannot be reproduced without express and specific consent.