Pensionable age to rise to 67

Australia’s retirement age is set to rise to 67 to avoid a “demographic timebomb” threatening the country’s economy.

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Treasurer Wayne Swan, who revealed the plan as part of his second budget, acknowledged the move was likely to be unpopular.

But he said it was one of a raft of “difficult decisions” the government had been forced to make to ensure Australia’s future prosperity.

The change will be implemented progressively, with the age at which the pension can be claimed ramped up by six months every two years, reaching 67 by the year 2023.

Under the new rules, everyone born after 1 January 1957 will have to work until 67 before accessing the age pension.

\’Pain and angst\’

“I know it will bring some pain and angst,” Mr Swan told reporters. “That is why we have decided to phase it in gradually.

“We need a sustainable pension system for the future.”

The Treasurer said the present system, in which people can access a pension at 65, was no longer sustainable, making long-term reform essential.

He said there were currently five Australians of working age for every pensioner aged 65 or over, but that by 2050 that figure would be 2.5.

Australia’s ageing population meant fewer and fewer workers were supporting more and more retirees, Mr Swan explained.

Old mandate

Mr Swan said the pensionable age had been set at 65 100 years ago, when a man retiring at 65 could expect to live a further 11 years.

“Since that time the number of people who qualify for a pension has doubled, and the length of time they are on it has also doubled,” he said.

The move to a pensionable age of 67 will bring Australia into line with many other developed countries, including the US, the UK and Germany, where ageing populations have forced a rethink of the pension rules.

However, the move is likely to anger some pensioners’ groups, who had spent the run-up to the budget arguing for pension increases.