Experts reveal shocking prediction: Australian pension age could hit 70 by 2050!
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Dark clouds loom on the horizon for Aussie pensioners, although luckily, the storm is further away than first thought. According to new research published in the prestigious Australian and New Zealand Journal of Statistics, Australians born after January 1957 could soon face a considerable retirement obstacle.From July 1, 2023, anyone born after January 1957 will need to wait until they reach 67 years of age to claim the pension. It’s part of the Liberal party’s original 2014 Federal Budget plan to try and keep the country’s pension system viable, and it looks like they’re only getting started.
New modelling by Macquarie University statistician Professor Hanlin Shang and his colleagues has predicted something a little more alarming than the rise to 67. If their prediction is correct, we could likely be looking at increasing the pension age to 70 years by the year 2050.
Why are the experts making such a potentially disheartening call? As Professor Shang has uncovered, one cause behind it is our current ‘state of population’. Recent statistics revealed that Australia’s birth rate is at a historic low, which means fewer people are entering the workforce – a stark contrast to the increasing numbers in the population over the pension age.
'Less people in the working group and more in retirement will make the old age dependency ratio (OADR) higher. What this means is there is less working people to support elderly people. And with more elderly people in the population, this will create a burden for the government pension system,' Professor Shang says.
To try and bring the all-important OADR value of 23% back to a viable level, Professor Shang’s models suggest that the pension age should be increased to 68 years by 2030, 69 years by 2036 and 70 years by 2050.
The reasoning behind it makes sense, although it doesn’t make the news any easier to swallow. As Professor Shang points out, 'Thanks to advancements in medicine and technology, people are living longer, although not necessarily healthier. The number of people working is decreasing, and birth rates are low. In 1961, the total birth rate was 3.5 babies per female. In 2020, this was 1.58.'
So, unfortunately, it does look like more changes to the pension age are on the way. We can only hope that our Government will pay careful attention to the situation and take a more gradual approach to any increases instead of rushing in like the frenzied situation recently seen in France.
Key Takeaways
- Expert modelling suggests that the Australian pension age should be increased to 70 by 2050, which is 15 years later than the original Liberal party plan from 2014.
- Australia's low birth rate and an ageing population are contributing to an increased old-age dependency ratio, putting a burden on the government pension system.
- The recommended increase to the pension age involves a gradual trajectory to maintain the old-age dependency ratio at 23%, with target ages of 68 by 2030 and 69 by 2036.
- Potential solutions to support the pension age and system include increasing the total fertility rate through government policies and increasing the number of migrants to Australia.
Will this change impact you? Do you have any thoughts or opinions on increasing the pension age? We would love to hear from you in the comments.