Pension age restricts choices for the poor

Joe Hockey’s proposal to lift the pension qualifying age will mean poor and marginalised people are forced to work longer while the wealthy will still be able to choose when they retire and how to fund their retirement.

If you have the retirement savings available to you to retire early, you’ll either take that option, or alternatively you’ll choose to work for longer. For people with low incomes, low wealth and low superannuation, there’s no such choice. You’ll work until you can afford to retire, which for many means waiting until the pension age.

As Andrew Leigh says in Battlers and Billionaires, on average, people living in poverty have shorter life expectancies (the difference is up to about six years on average) and lower retirement savings. This means that they’ll be working longer only to enjoy a shorter retirement. And we also know that women, Indigenous people and migrants are over-represented in the poorest groups, and under-represented in the wealthiest groups.

Women have particularly low retirement savings, as they are more likely to be working in lower-paid industries, to take time out of the workforce to have and raise children, to work part-time, and of course to earn less than their male peers. With fewer options about financing retirement, women will have no option but to work until pension age.

On top of the issues of income and superannuation, Age Discrimination Commissioner Susan Ryan frequently points out that age discrimination is still a factor in employment, with employers reluctant to hire people over the age of 55.

Physically, the range of jobs available to older people is also segmented. The people who are able to choose to continue work until older age tend to work in occupations with low physical labour. It’s one thing to ask a partner in a law firm to work until he is 70; it is another thing to force a labourer to keep his body going well into his 60s.

Any plan to lift the pension age needs to be accompanied by a comprehensive package of training for employers and recruiters to hire older workers. It also needs to fund retraining options for workers who can no longer physically do the work that they used to do. The $10 000 inducement for employers only addresses one side of the equation and provides no assistance to older workers to update their skills.

Of course, if the Coalition were serious about getting the budget into surplus and serious about getting more older people to work, their policy mix would be greater than this simplistic approach.

If the Coalition is trying to find budget savings, then they should look at the options that Labor proposed that lead to both increased savings and greater fairness. The increased tax on the superannuation contributions of the extremely wealthy provided a fair way to find savings. The Low-Income Superannuation Contribution provided a fair way to boost savings at only a small cost to government, but as a massive bonus to those who relied upon it.

Labor will always look out for those who need a helping hand, and these measures that we introduced while in government to reduce inequality and lift retirement savings are exactly the sorts of measured, responsible and fair options that we should continue to pursue when we are back in government.

In the end, wealthy people will still have the choices available to them that they have always had. Poor people will continue to have limited choices, and lifting the retirement age will just restrict those choices even further.

This article was co-authored by Cassidy Boyd. 

About Louise Crossman

Louise Crossman

Louise Crossman was an adviser in the previous Federal Labor Government, including as the Status of Women Adviser to the former Minister for the Status of Women, and is currently working at a Canberra law firm. She has previously worked in policy and industrial roles as a Federal Public Servant and for the CFMEU.

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