Do Joe Hockey and Mathias Cormann want to reduce the number of retirement years the average Australian worker can expect before death intervenes?

In July 1908 and December 1910 when the Commonwealth age pension came into effect for men and then women aged 65 years and 60 years respectively, average life expectancy after reaching retirement age was 11.3 years for men and approximately 13 years for women.

Since then retirement age has been reset to 65 years of age for both genders.

However, according to Centrelink from 1 July 2017, the qualifying age for Age Pension will increase from 65 years to 65 and a half years. The qualifying age will then rise by six months every two years, reaching 67 by 1 July 2023. 

Currently residual life expectancy for someone aged sixty-five years is 19.1 years for men and 22 years for women.

However, by seventy years of age life expectancy will drop to 15.3 years for men and 17.8 years for women with further declines in the years 80, 90 and 100.

The Australian Bureau of Statistics also notes; Since 1983 the number of deaths has increased by 1% on average annually. The steady increase in the number of deaths over time reflects the increasing size of the population and, in particular, the increasing number of older people. With continued ageing of the population the number of deaths will continue to rise, with deaths projected to outnumber births sometime in the 2030s.

The Australian Institute of Health and Welfare states; At 30 June 2012, 76% of people aged 65 and over received an Age Pension through Centrelink or a similar payment from the Department of Veterans’ Affairs. More than half (59%) of those receiving a Centrelink Age Pension received a full-rate pension.

So basically when you consider these statistics they indicate that the majority of those Australian citizens already receiving an age pension will cease drawing this pension sometime in the next 2 to 18 years.

Most of those citizens about to become eligible will likely be receiving the age pension for the next 19.1 to 22 years.

While in nine years time, everyone born after mid 1956 will on retirement only receive this pension for an estimated 17.6 to 20.3 years. That is approximately 6.3 to 7.3 years longer than those people receiving the aged pension in 1908-1910.

So when the Federal Finance Minister is reported as stating that life expectancy was 55 when the age pension was introduced, but life expectancy was now 30 years longer he is simply missing the point – the average Australian is not likely to live another thirty years beyond retirement.

And when the Australian Treasurer Joe Hockey talks of the need to raise the national retirement qualifying age beyond the current planned rise, he is being somewhat premature. Especially as the number of retirees dying by 2023 will have grown considerably.

One might suspect Messrs. Hockey and Cormann of hoping that if they raise the pension eligibility age to 70 years then, given the last calculated median age at death for both genders, around half of those applying for this pension will possibly have ceased receiving it within 8.6 to 16.6 years.

Which for the men in this group would mean that (if Hockey and Cormann prevail) they will have less years to enjoy retirement than their forebears did in 1908, while women in the same group only get around three years more than women did in1910.