The Association of Superannuation Funds of Australia (ASFA) has welcomed Prime Minister Scott Morrison’s announcement today that the government will scrap a proposal to lift the age of eligibility for the age pension beyond 67 years.
ASFA chief executive Martin Fahy said the age pension is affordable at below 3 per cent of gross domestic product and it will continue to be so in the future due to the operation of the means test and members having more retirement savings through superannuation.
“An increase in eligibility age beyond 67 is not needed on affordability grounds in terms of public finance,” Fahy said.
“With the scheduled increase in SG (superannuation guarantee) to 12 per cent, ASFA projects the rate of people relying solely or almost exclusively on the age pension will halve between now and 2050, from around 40 per cent to 20 per cent.
“It is good to incentivise people working later in life, however, the benefit of a safety net for those who are not able to or do not wish to work should be maintained.”
He added measures announced in this year’s federal budget, such as an increase in the pension work bonus, act as incentives to continue with paid work.
Morrison this morning announced plans to dump the government’s proposal to raise the retirement age from 67 to 70.
He said cabinet will ratify the decision next week.
“The pension age going to 70: gone,” he told the Nine Network’s Today .
“I don’t think we need that measure any longer when it comes to raising the pension age and it’s one of the things I’ll be changing pretty quickly. I’ve talked to my colleagues about it. We’ll ratify it next week.”
Under the proposal announced by the Abbott government in its first budget, from 1 July 2025 the age pension qualifying age would continue to rise by six months every two years, from the qualifying age of 67 until it hit 70 by 1 July 2035.
The measure was forecast to save the budget around $3.6 billion over four years.
