RAISING the pension age from 65 to 67 will have limited impact on older workers' employment rates due to the high number of Australians who leave the workforce in their 50s and early 60s and receive a disability pension or other government payment, a leading economist says.

Bob Gregory, professor of economics at the Australian National University, says 90 per cent of single people who take up the age pension at 65 had previously received another payment - the disability pension, carer payment or Newstart Allowance, on average for six years.

A high proportion of married couples also followed this path, from dependence on a government payment in their late 50s or early 60s to reliance on the age pension, he said.
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''If I go on the disability pension at 63, I move seamlessly to the age pension at 65,'' he said. ''If eligibility for the age pension moves to 67, I just spend the extra years on the disability pension, so nothing is gained for workforce participation.''

Professor Gregory, who will address a forum today in Sydney, said policies to increase workforce participation had to start much earlier than 65.

In the past decade, there had been improvements in retention of older workers. Nevertheless it was the 55-65 age group that was moving out of the labour market.

In 2007, the average age of retirement was 59 years.

Professor Gregory said that, contrary to myth, it was the poorer Australians who left early or lost their jobs, and moved on to a payment, and the better-off who stayed on in jobs they usually liked.

Last year, the government announced that in 2017, the qualifying age for the age pension would gradually start to increase, reaching 67 for both men and women by 2023. This means men and women born on or after January 1, 1957, will not be eligible for the age pension until they are 67. Those born after July 1, 1952, will also have to wait longer than now.

Higher retirement ages are intended to moderate the long-term costs of providing age pensions to an ever-growing proportion of the population. But past efforts to reduce the numbers on the disability pension have had little success.

Roger Wilkins, principal research fellow at the Melbourne Institute, said raising the pension age to 67 was important in shifting retirement norms.

But governments were constrained in their influence over early retirement not only because people could get other payments, but because more of them would have adequate superannuation they could access at 60, or earlier for those born before 1964.

''What will matter more than pension age will be the age people can access their super, the tax treatment of super and the rules about how quickly they can deplete it,'' he said.

The Henry tax review called for the preservation age for superannuation to be aligned with the age pension age. But the government has ruled it out.

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Do you belong to a Superannuation scheme???

IMO the pension age should be lowered. Who wants to work until they are 65 then spend the next few years sitting around waiting to die?

We should look at returning the voting age too 21. As most under 21 have little care or understanding  politics.

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That's the perfect age. People should a good decade or so to enjoy their retirement, go on holidays, etc. Finishing work at 67 is a little late, these people will be too long in the tooth to enjoy a good long break!

Vanessa wrote on Aug 19^th, 2010 at 5:59pm:



Yeah, and if they raise it to 67 now, by the time I'm 67, the cutoff age will be 75.  Of course I've got super so it won't matter to me, but why should we slave away for 50 years and not get any time for us?

Vanessa wrote on Aug 19^th, 2010 at 6:00pm:


Voting should be voluntary for everyone.

That depends what sort of work you do Vanessa.