Why raise the pension age?

There has been much speculation recently about the merits of raising the retirement pension age and compulsory superannuation to contend with an aging population. While it is cited as being economically necessary, it also raises the question of it being fair to expect people to work harder and longer when they grew up in a society with different promises.

The fluctuations of superannuation share losses and gains, higher life expectancy, and higher aged care and cost of living expenses have taken away the security of looking forward to a relaxing retirement.

While higher life expectancy broadly reflects healthier and fitter retirees, many of whom want to stay productive, active and in some cases working, there are many in their 60s-plus who are forced to continue working because of higher living costs.

Should there should be a system that promotes choice rather than requirement, heading into the future?

The Federal Government decided in 2009 to raise the pension age to 67, from 2023 and has said it will be extending compulsory super from nine per cent to 12 per cent. While the latter might be a course of good diligence, a retiree’s total pot at retirement is at the mercy of global markets – as are any housing or other assets.

There was a trend some years ago (pre-GFC collapse) where many people were financially able to retire at age 55. This was achieved well enough with little compulsory super or reliance on the less than adequate pension payments of $285-$360 per person per week kicking in 10 years later.

Choice was there. But the GFC seems to have promulgated a call to arms for a number of Western nations, including Australia (despite successively increasing compulsory super since 1992 to offset pension reliance) to increase pension age.

While many more are likely to follow, the new French Government has restored from its predecessor the pension age back to 60. This is a country in the grip of the Euro crises, high unemployment and with a precarious immediate economic future.

Despite this, France’s socialist culture deems it more important to look after the welfare of its people in older age than to make them work longer. While there is enough research that points to happier populations being more productive, does this suggest longer term holistic benefits or is it bad economics which will come back to bite them like in Greece?

What is more important living into retirement in Australia? Is working another two years a good idea? Is it likely that the pension age will inevitably be increased to the age of 70 in time? More importantly what sort of place do you want to live in? Would you prefer to see more tax money going into earlier pensions? Do you think the pension is enough or should it be increased?

Have your say…