Australian Prime Minister Scott Morrison has said that the government had abandoned plans to legislate for a rise in the retirement age from 67 to 70.
“If they want to keep working, well they can, and things like the pension work bonus and programmes like that will support them in that choice,” he said.
“But for those who aren’t in that position, then the pension will be there and the retirement age will remain at 67.”
The decision is significant because it is linked to when Australians can claim the government-funded income-tested Age Pension.
The Age Pension scheme pays out a steady income to eligible Australians, to help them cope with the costs of living. All the monies that are paid out under this scheme come from different types of tax collections.
The government decided in its 2014-15 Budget to lift the age at which Australians can claim the Age Pension from 65.5 years to 67 years by July 2023. It was then due to rise again to 70 by 2035. According to the World Bank, the average life expectancy of Australians is 82.5 years.
The federal government had forecast in 2014 that lifting the retirement age to 70 would save the country A$5bn ($3.6bn) in pension payments over a decade.
The Australian Institute of Superannuation Trustees (AIST) welcomes Mr Morrison’s announcement. Its CEO, Ms Eva Scheerlinck, said, “Raising the access age for the age pension to 70 would have been unfair and discriminatory to many older Australians who simply do not have the opportunity to continue in paid work.”
The Association of Superannuation Funds of Australia (ASFA) also welcomes the announcement. ASFA CEO Dr Martin Fahy said the decision recognises that many Australians find it difficult to work into their late 60s due to the nature of their occupation and/or their health.
Dr Fahy said, “An increase in eligibility age beyond 67 is not needed on affordability grounds in terms of public finance.”
However, opponents say that the decision is not in Australia's long-term national interests as the population ages.