As part of the Government’s Secure and Sustainable Pension Reform, in 2017 the qualifying age for the Age Pension will gradually increase from 65 to 67 by 2023.
As Australians are healthier and living longer, the qualifying age for Age Pension for men and women will be increased by six months every two years, commencing from 1 July 2017 and reaching 67 on 1 July 2023.
The reforms are necessary to prepare Australia for the challenges of the future.
These changes will not affect current age pensioners.
Only new entrants to the pension system from 1 July 2017 will be affected.
The qualifying age for the Veterans’ Service Pension will remain at 60.
Increasing the age pension age is a responsible reform to meet the challenge of an ageing population and the economic impact it will have for all Australians.
The pension age was set at 65 in 1909. One hundred years later Australia has changed.
When the Age Pension was introduced one hundred years ago, a man retiring at age 65 would have expected to spend an average of 11 years in retirement.
By 2017 it is projected that the average number of years in retirement for a 65 year old man will have increased to 19.5 years. A woman of the same age could expect to spend 23.5 years in retirement by 2017.
Australia must move towards a higher pension age over the next decade.
A gradual increase in the age pension qualifying age is responsible and necessary to help meet major social and economic challenges as Australia’s population ages.
It is projected that by 2047 around a quarter of the Australian population, or 7.2 million Australians, will be over the age of 65. This is almost double the current proportion of 13 per cent.
The oldest person affected by this reform will be 57 years old on 1 July 2009, whose pension age will increase by six months to 65 ½.
Everyone born after 1 January 1957 will have an age pension age of 67. They will have at least 12 ½ years to plan their retirement under these new arrangements.
Introducing this reform from 2017 gives a considerable lead time for people to adjust to the change. The phase in of the increased age mirrors the rate of increase of the pension age for women which is currently increasing and will reach 65 years on 1 July 2013.
From 2017-18 it is expected that around 130,000 people per year would face a slightly longer period to qualify for Age Pension.
Many other developed economies have made the decision to increase their pension age. The United States, Germany, Norway, Denmark and Iceland are progressively increasing their pension age to 67, and the United Kingdom is increasing its pension age to 68.
According to the United Nations, Australia has the fourth-highest life expectancy in the world.
Our reforms represent decisive action to prepare Australia for the future.
We must address the challenges of Australia’s ageing population in the long-term interests of the nation.
The Secure and Sustainable Pension Reforms will deliver a stronger and fairer pension system to provide security and sustainability into the future.
The table below shows how the age pension age will change:
12 May 2009