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The days of clocking off at age 65 after a lifetime of employment are long gone and even though compulsory super has provided more flexibility, staying in a full-time job until you choose to retire seems to be increasingly difficult.
While Australia doesn’t have an official retirement age, the age at which eligible retirees can apply for the Age Pension is set to rise to 67 by 2023. Yet many older workers are finding they are no longer wanted well before they qualify for the Age Pension.
So, who is affected by age discrimination and what can you do to stop it from ruining your dreams of a financially secure retirement?
What is age discrimination?
Age discrimination in the workplace is unlawful and occurs if a person is treated less favourably than another person in a similar situation because of their age. According to the Australian Human Rights Commission (AHRC), examples of age discrimination include:
- Not considering an older applicant for a job because it’s assumed they aren’t as up to date with technology as a younger person
- Not offering training opportunities at work to an older employee as it’s assumed they will retire soon
- Requiring an older person to meet a physical fitness test for a job where their physical fitness has nothing to do with their ability to perform the essential duties of the job
- Targeting older employees for redundancies.
An AHRC survey in 2021 of 2,440 Aussies ranging from young adults to older people found 90% of respondents believe ageism exists and that it’s directed at people across all three adult age groups (young, middle-age and older).
The majority of participants (83%) believe ageism is a problem, while 47% of older survey respondents report having age-based assumptions made about them.
Too old to work: Who is an older worker?
These findings about ageism tally with other research. The 2021 Australian HR Institute study Employing and Retaining Older Workers found almost half (46.7%) of employers are either reluctant, or may be reluctant, to recruit older workers.
Surprisingly, the perception of what constitutes an ‘older’ worker is shifting to younger ages. The study found 17% of local businesses consider someone aged 51–54 as an older worker, up from only 12.5% in 2014.
This downward shift in age for an older worker seems widespread, with 2022 data from the Australian Bureau of Statistics (ABS) showing 29% of potential workers aged 55 and over reporting their main difficulty in finding work during the past 12 months was due to being “considered too old by employers”.
At the same time, Aussies increasingly want to work to an older age. The latest available ABS data on retirement intentions found the average age people intend to retire is 65.5 years. Among those aged 60–64, the average age intended for retirement is 66.6 years, while among those aged 65–69, the average age is 69.3.
What are my rights when it comes to age discrimination in employment?
In Australia, everyone has the right to continue working without being discriminated against because of their age.
In most cases it’s unlawful to treat a person unfairly because of their age but, in some circumstances, treating someone differently because of their age is not against the law. According to the AHRC these circumstances include things done:
- In compliance with Commonwealth, state and territory laws
- As part of certain health programs
- As part of ‘positive discrimination’, where a genuine benefit is provided to people of a particular age group, or something is done that helps to meet an identified need of people of a certain age group
- If the discrimination is reasonably based on statistical data or other relevant factors in relation to insurance and super.
Help is available if you believe you have been unfairly discriminated against because of your age. For assistance – or to make a complaint about discrimination in employment – contact AHRC who can investigate and try to resolve your complaint by conciliation. Ring the AHRC National Information Service on 1300 656 419 or visit www.humanrights.gov.au.
Alternatively, you can contact the Fair Work Commission on 1300 799 675 if you believe you have suffered age discrimination.
The Fair Work Ombudsman is also able to hear complaints relating to discrimination in employment through the Fair Work Infoline on 131 394.
Is age discrimination the end of the road?
According to the final report from the government’s 2020 Retirement Income Review, the average age of retirement in Australia is currently around age 62–65, but many people are still in the workforce at an older age. Entering retirement is not a permanent decision either, with some people deciding to return to work after retiring.
According to ABS data, the main reasons for leaving retirement and going back into full or part-time employment are financial necessity and boredom. Statistics show 35.2% of people come out of retirement due to financial need, 34.8% cite boredom and needing something to do, while 14% say an interesting opportunity came up.
So, just because you are forced into retirement due to age discrimination, it’s important to remember it may not be a one-way trip.
What it means for your super
Workplace age discrimination can have a significant impact on your retirement savings. If you’re unable to remain in paid employment until a time of your choosing due to age discrimination, you’re less likely to accrue sufficient savings to be fully self-funded in your retirement years.
Additionally, you may find yourself caught in the difficult position of being unable to find paid employment, but being too young to qualify for the Age Pension to support yourself.
The eligibility rules for unemployment or disability benefits are increasingly strict, so you may need to exhaust all your financial resources to support yourself if you don’t qualify.
If you are eligible to access your super, you may find you need to use these savings supporting yourself until you reach Age Pension age and qualify for an Age Pension.
5 tips to help protect your retirement finances
1. Start saving for your nest egg early
A key message from the studies into employment-related age discrimination is it’s not a great idea to assume you have 40 or 50 years of employment to save for your retirement. Many people leave saving for their retirement until the decade or so before they plan to retire, but if you’re forced out of the workforce earlier than you expect, you may not get that opportunity.
Starting to add a bit extra to your super as early as possible in your working life also means you enjoy the benefits of compound interest, giving your nest egg a real boost. You also get to do so in the tax-efficient environment surrounding the super system.
2. Keep contributing after you’re retired
Although you may find yourself forced out of the workforce by age discrimination, that does not mean you’re totally excluded from the super system.
Even if you don’t have an employer making regular super guarantee (SG) contributions on your behalf, there are other super contributions you can make when you’re not working but under age 75. These include non-concessional (after-tax) contributions and downsizer contributions (from age 60) from the sale of your home.
3. Forget about the work test
Fortunately there is one thing you don’t need to worry about anymore when it comes to age discrimination, and that’s the dreaded work test for eligibility to make super contributions in your 60s and 70s.
From 1 July 2022, you no longer need to meet the requirements of the work test (being ‘gainfully’ employed for 40 hours or more in any 30-day period in a financial year) if you’re aged between 67 and 74 to qualify to make non-concessional (after-tax) contributions, or have salary-sacrifice contributions made on your behalf.
This means you are free to continue making super contributions to top up your super account until you turn 75 if you meet the other eligibility criteria.
4. Take advantage of the Age Pension Work Bonus
Although employer attitudes can make it tough to stay in the workforce, if you do remain employed the government is willing to help out a bit through its Age Pension Work Bonus.
The Work Bonus reduces the amount of employment income or eligible self-employment income applied to your rate of Age Pension entitlement under the income test. If you’re of Age Pension age and receiving a form of pension other than the single Parenting Payment and have income from employment or self-employment, you may be eligible for the Work Bonus. Services Australia automatically applies the Work Bonus to your income when you meet the eligibility requirements.
5. Apply for some of your super benefit
Even if you haven’t reached your preservation age and don’t qualify for one of the normal conditions of release for your super benefit, you can apply for access to some of your super savings.
There are some special, very restrictive conditions of release that may allow you to receive some of your super benefit if you are unable to find paid employment. These conditions include severe financial hardship, compassionate grounds, a terminal medical condition, temporary incapacity and permanent incapacity.