Jenny Macklin defends rise in pension retirement age

The Minister for Families, Housing, Community Services and Indigenous Affairs, Jenny Macklin has defended the Government’s decision to raise the retirement age for pensions to 67.

In a speech to the Sydney Institute, she said  the budget changes were “framed for the future and the challenges of an ageing population”.

“This is the Budget that tackles the intergenerational challenges we’ve been hearing about for so long,” she said.

“It is about:

-Reforming the pension system to make it adequate for the millions of age and disability pensioners, carers and veterans who depend on it;

-Offsetting the cost of pension increases with savings measures to make the pension system sustainable over the long term; and

-Building a labour force capable of supporting the ageing population, including a comprehensive paid parental leave scheme to encourage women’s participation in the workforce.

“Increasing workforce participation is one side of the ageing population equation. The other side is building a framework of retirement support which is both adequate and sustainable,” she continued.

“A system which is built on three pillars;

1.The age pension, the foundation of our targeted, means tested and non-contributory social security system.

2.The compulsory superannuation guarantee, introduced by Labor in the early 1990s, so working Australians have private savings in retirement.

3.Voluntary private savings supported and encouraged through generous tax concessions and other incentives.

“The age pension will always be there to support Australians who need it as they grow older. Currently, nearly three out of four Australians over the age of 65 are on the age pension.

“Projections are that this proportion will remain fairly constant over the next 50 years. Pension adequacy and sustainability are inter-dependent. You can’t have one without the other,” she said.

Jenny Macklin said that increasing the age pension age progressively to 67 by 2023 was not an easy decision.

“But even the Opposition agrees it has to happen now, although when they were in Government it was a tough decision they chose to avoid”.

But raising the age pension age does not automatically reduce the number of years people receive the pension. In 1986, a man going on to the pension at the qualifying age of 65, on average would receive the pension for 15 years. By 2010, this will reach around 21 years.

But even in 2023, when the qualifying age reaches 67, with improved life expectancy it’s expected the time spent on the pension will be 22 years.

“In 2009 this Government, in the most difficult of economic times, was prepared to make tough but essential decisions in the national interest,” she concluded.