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.
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.
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 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.
The table below shows how the age pension age will change:
Date |
New age pension age |
Affects people born |
When group reaches new age pension age |
|---|---|---|---|
| 1 July 2017 | 65 years & 6 months | 1 July 1952 to 31 December 1953 | 1 January 2018 to 30 June 2019 |
| 1 July 2019 | 66 years | 1 January 1954 to 30 June 1955 | 1 January 2020 to 30 June 2021 |
| 1 July 2021 | 66 years & 6 months | 1 July 1955 to 31 December 1956 | 1 January 2022 to 30 June 2023 |
| 1 July 2023 | 67 years | From 1 January 1957 | From 1 January 2024 |
How do you feel about this?
Proposed changes will not become law until the Budget has been passed by the House of Representatives and the Senate, and signed by the Executive Council.
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
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