The pension age is already high enough

In the light of Scott Morrison’s latest exercise in jettisoning unpopular commitments, in this case the proposal to raise the pension age to 70, I thought I would relink this piece on the Intergenerational Report, from the Abbott-Hockey era. The crucial observation is that, had the increase gone ahead, it would have cancelled out all of the increase in conditional life expectancy at pension age for women since the pension was introduced back in 1907, and most of the increase for men. The only real problem in retirement incomes policy is the lavish concessional treatment of superannuation.

30 thoughts on “The pension age is already high enough

  1. I’m ambivalent about this. On the one hand I’ve long argued (from an exceptionally well informed position) that Australia’s age pension is stunningly affordable and will remain so, with or without raising the qualifying age. Claims that the age pension will send us broke or that we need super to manage the costs have always been complete rubbish put about by vested interests.

    On the other, I calculate a gradually raised qualifying age (under the proposal the qualifying age would only have reached 70 in 2045) would make it much more likely that the public will support a fairer and more generous system. Without it I think the highly regressive and inefficient superannuation system will become increasingly untouchable.

    And the undeniable basic point that is, just as today’s 65yos are on average far more capable of continuing in a job than 65yos of 30 years ago, so 65yos in 2048 can be expected to, on average, be far more capable of continuing than today’s 65yos. Of course the minority of people below the qualifying age who are not capable of continuing are, and will continue to be, treated appallingly – but arguably they were treated even worse 30 years ago.

  2. DD is dead right on about the affordability. Treasury has consistently showed this.

    I have to say yes 65 year olds are more than capable of doing the job BUT try finding an employer who actually believes this.

    I cannot see much change in employers attitudes from when Bronwyn Bishop was Minster for Aging back in 1998

  3. Which 65 year olds? There are plenty of trades that are hard on the body, and these are the people who rely most on the pension.

  4. I think an unintended consequence of the superannuation system will be that people who put enough money in to retire without a pension are not going want to pay for people that didn’t, even if the country could afford it — Just like people don’t want to pay for unemployed benefits now. In this case, I agree with DD that raising the age to 70 might quell some of the development of these attitudes.

  5. “people who put enough money in to retire without a pension are not going want to pay for people that didn’t” – except that they won’t be. Taxpayers’ money is just taken out of circulation. It’s not put into a vast account somewhere. Pensions (and everything else) are paid by the government creating the money by the act of spending it. The federal Budget is limited by the resources available, not the dollars. It’s gnout time the neoliberal Keating-Costello-Abbot-Hockey nonsense of ‘return to surplus’ was recognised as depleting the private sector (see sectoral balances).
    Even Morrison said in 2017 that there is “good debt and bad debt” and that “it’s not the size of the deficit that is important but what it is spent on. Even Morrison!
    Time to consign this hoary old gold standard thought to history.
    It has been the justification of far too much neoliberal austerity and needs to be recognised as at least a mistruth.
    We could afford free health and education a few decades ago – why not now?
    What has changed economically? Nothing.
    Neoliberalism has succeeded in making government money seem scarce and has allowed the introduction and growth of private service providers.
    Ditto electricity and gas.
    Ditto phone and internet,
    Ditto provision of roads.
    Ditto employment and disability services.
    Ditto a whole lot more.
    These should all be in public ownership. Sure allow some private competition but don’t give it any advantage and don’t sell monopoly assets. The federal government can afford not to.

  6. I never said we could or couldn’t pay for it. I said that some proportion of people won’t want to pay for it (just like people don’t want to pay for reasonable levels of unemployment benefits now — something that is far less expensive than pensions), and these are really two quite different things. That’s why I agree with DD above, and I think this scenario is far more likely than people seem to assume.

    For example, just imagine if various countries with currently unsustainable pension programs start getting rid of them or massively cutting them back (this seems inevitable) — it would be a dream for some politicians here, and they could use it to appeal to people in younger demographics who see people getting paid benefits living in houses they will never afford, and older people who have lived relatively frugal lives so they don’t need a pension.

  7. Apparently we’re going to live to 150 before too long.

    (Well, maybe not us, but serious people who apparently know what they are talking about say it’s going to happen.)

    Sounds good, but we’ll have to work to 120. Hard to see how we can retire at 67 and be on the pension for 83 years.

  8. There is no clear cut “us and them”; many taxpayers become welfare dependant at some stage in their lives, and taxpayers investing in super get a whole lot of tax breaks.

  9. Unemployment is a persistent feature of our economy. We have a jobs shortage not a labour shortage. Therefore it makes no sense to attempt to force extra people into the labor force. The pension age should be returned to 65. Also, the unemployment benefit rate should be lifted to equal the pension rate. This in turn would make us question why a distinction between age pension and unemployment benefit has to exist at all.

    The coercive and repressive features of our welfare qualification system are designed as an interlinked set of social controls. Change one feature to a more logical configuration and it then highlights the illogical nature of the rest of the system’s features. The one thing that the “powers that be” do not want to have questioned is the overall logic and legitimacy of the entire economic system.

    There are always complaints that workers cannot be found for certain tasks or certain localities and regions. The issue that is never canvassed is that the wages on offer are clearly not high enough. Offer a high enough wage and someone will always do the work. In turn, it might well not be economic (as a business or employer) to offer a high enough wage. In that case, if the business is not viable enough to pay a living wage (with premiums for work difficulty, remoteness etc.) which will attract workers then the business is not viable. The business correctly, in that case, should be go bankrupt.

    What we see, over and over, is non-viable businesses (those which cannot pay a living wage sufficient to attract workers) lobby for subsidies and special treatment (pull) and harsh unemployment laws (push) to assist them to attract workers. These subsidies and special treatment should not be provided. The non-viable businesses should be left to fail.

    Instead, the federal government should step in as employer of last resort via a Job Guarantee. The JG would provide a minimum wage and thus provide the minimum wage floor for the economy. Where non-viable businesses fail and the activity is judged to be nationally necessary, then a government provider is clearly requied. It is not the case that everything that is physically and socially necessary is automatically provided for by private enterprise. There is market failure and there is non-marketisable need. There is also need without the minimum wealth condition, on the part of the citizen, to satisfy that need.

    All of these considerations point to the necessity to set a high bar for private economic activity: meet consumer needs legally, pay living wages, pay for negative externalities, do so without subsidies or else go bust. Tough love for private enterprise! These considerations then point to the requirement for an extensive public sector which operates in the arenas of natural monopoly, market failure, non-marketisable social needs, strategic social and national needs and so on.

  10. “There is no clear cut “us and them”; many taxpayers become welfare dependant at some stage in their lives”

    Politically there is, otherwise why do we pay the unemployed such a pittance?

    People’s opinions seem easily biased into categories on these issues.

  11. There’s a dude at Harvard Medical School, an Australian called David Sinclair, who says 150 is reachable. Usually cranks don’t get to be professors at Harvard Medical School with big labs and big budgets. I have no idea about the chemistry or biology behind these claims. Those who do can argue the toss with him.

  12. “If I do live to 150, I’ll be able to fill a blog with nothing but previously published refutations of wrong claims.”

    As people live longer is it more or less likely that they will keep repeating previously refuted talking points?

  13. Smith9 says Professor Sinclair thinks ‘150 is reachable’. I can’t find him saying so anywhere, but Sinclair’s many years of spruiking first ‘reservatrol’ and now DNA aging reversal possibilities may have included this. But anything like that depends on making breakthroughs in reversal of genetic aging that haven’t yet been established; and, as Prof Q’s linked discussion shows, there’s a pretty big difference between some small number of people living to 150 (some thirty years more than anyone ever has) and people generally doing so (some seventy years more than even the healthiest and wealthiest populations now).
    I don’t have to argue the chemistry or the biology with Professor Sinclair. I’m happy to point out that there’s no established chemistry or biology for 150 year lifespans yet, and that raising the record life expectancy to 150 wouldn’t mean anything like that lifespan generally. Perhaps Smith9 might read the linked discussion by Prof Q and engage with the points it made. Or perhaps Smith9 will just keep acting as though ‘we’re going to live to 150 before too long’ is based on reality.

  14. “Politically there is, otherwise why do we pay the unemployed such a pittance?”

    We didn’t always pay the unemployed such a pittance, Once upon a time, back in 1973 in March the unemployment benefit UB rate was linked to pensions and the UB became payable at same rate as pensions. A standard rate for unmarried beneficiaries and a married rate for married beneficiaries and their spouses was introduced. Lower rate of benefits for unmarried juniors abolished.

    Those were the days eh? How did we do it?

    “People’s opinions seem easily biased into categories on these issues.”

    For sure it is easy to bias people into judging their neighbours if one owns the media or a substantial part of it and is therefore able to pretty much monopolise the national ‘conservation’ – how did that happen one wonders – and it has become politically incorrect since the heady days of the ’70’s to point to evidence that human nature is essentially good and people are not naturally selfish and greedy or lazy and stupid .

  15. Sinclair is featured in this month’s The Monthly. Here is a direct quote

    I’m on the record saying the first person to live to 150 has already been born. Anyone who says there is a limit built into our biology doesn’t know what they’re talking about. There’s no biological law for ageing.

    He doesn’t say everybody will love to 150 (and neither did I). He does say there is real potential to greatly increase to life span of humans, far more than has happened in the last century. Maybe he is right. Maybe he is wrong. I don’t know and neither do you. As you say, there’s no established chemistry or biology for 150 year lifespans yet. The important word is yet. I can’t predict future scientific breakthroughs and neither can you.

  16. The oldest fully verifed human lifespan to date is 122 (Jeanne Calment), and its possible that there may have been one or more lives slightly longer than that but unverifed. All Professor Sinclair (and Joe Hockey, who John was ridiculing) is claiming is that some time over the next 150 years the world’s very oldest living human will be 150.

    That may or may not happen but it’s not an obviously absurd forecast, especially given there are and will be a lot more people in the world than there were when Jeanne Calment was born. Certainly if life expectancy at older ages in developed countries continues to increase at the rate that it has in the last few decades (admittedly a big if) then it’s very possible.

  17. Smith9, who ‘can’t predict future scientific breakthroughs’, said ‘Apparently we’re all going to live to 150 before too long’.
    Smith9 now confirms that the most Professor Sinclair said was that (probably) the first person who will live to 150 is already alive.
    Sinclair was claiming that there would be breakthroughs that would make that happen. Maybe so.
    But Smith9 kicked this discussion off by claiming that general lifespans were going to rise to 150 and that this would mean we would have to work to 120. I think the effect of a general doubling of life span might be a bit more complicated than just a later retirement age; but we’d probably know a bit about the way life span was being extended, and its implications, if it started to happen. Meanwhile, Prof Q’s discussion was linked above. How about addressing its arguments, if you have some disagreement with them? For my part, I don’t.

  18. DD:

    “The oldest fully verified human lifespan to date is 122 (Jeanne Calment) …”

    Yep, and she died more than 20 years ago. At the time she was frail, had bones like chalk and was blind and deaf. This lends no credit to Smith’s claim that “apparently we’re going to live to 150 before too long” and that we will soon have to work until we are 120.

    Meanwhile Smith’s apparent science hero, David Sinclair, has made numerous claims that have not stacked up, such as the claim that resveratrol (found in red wine) is an anti-aging agent. Turns out you would probably be better off sticking one of Gwyneth Paltrow’s jade and rose quartz vaginal eggs in your nether regions.


  19. Chrishod +1. Smith9?

    I have emailed your straw man directly smith9. Doubt he will reply tho.

    Would you smith9, please present us with some statistics please re how long before we are all living to 150, or even when we need to take suck improvement in life expectancy seriously. Maybe then we will be able to debate facts.

  20. Gimme a break. Look at the Royal Couple. They aint even 100 and they look like zombies.
    What idiot would wish to live to 100 let alone 150!

  21. Nottrampis

    Did you see John McCain’s mother at his funeral? She’s 106 and looks 20 years younger.

  22. Getting people to on average to 100 = maybe possible
    Getting people to live forever until they are squished = Looks doable
    Getting people to live until they are 150 = next to impossible

    Getting people to live to 150 is so incredibly difficult I don’t see how it would be possible to do that without making people capable of living more or less forever barring accidents. But getting people to live to an average of 150 would be a really weird place to stop. Unless the assumption is people can potentially live forever but the future is more dangerous than developed countries are today.

    But living forever shouldn’t be too difficult to do. We just need to get rid of lousy stuff like DNA and human cells or just legally define a person as being a collection of ones and zeros on a floppy disk. (This could be a fairly specific collection of ones and zeros or it could be any collection of ones and zeros, in which case the population would suddenly boom.)

  23. Leave welfare alone. Instead, let’s have some attempt to mollify the money addiction called greed at the top.

    In the end, such people are no different to drug addicts.

  24. The real problem is welfare for the well-off. There is much more corporate welfare and welfare for the rich then there is for the poor. See:

    “Tax concessions to wealthy costing six times the dole: Anglicare” – ABC

    ” Key points:

    – Major tax concessions cost the federal budget around $135 billion a year in lost revenue
    – The four biggest welfare payments cost the government around $124 billion
    – Around half the tax concessions flow to the wealthiest 20 per cent, while only $6.1 billion went to the bottom 20 per cent”

    Then there is the issue of corporate tax avoidance. Not only do corporations expect corporate welfare they also expect to pay no or minimal tax. And they are largely successful in this endeavor.

    The world’s and Australia’s economic system is now so bad we can quite validly say we have entered the era of systemic crony capitalism.

  25. Icon, apparently those Anglicans in their report did not include the massive tax concessions and subsidies paid to organised religionists. Perhaps another $50 billion there.

  26. Re welfare for the well-off: this just reflects the ideologies of politicians in a far worse way than you think now.
    They decide to give this welfare for the well-off (WFTWO?) in whatever form it takes.
    Then they decide they can’t ‘afford’ to give any more welfare, so the poor, unemployed etc have to make do.
    That second decision is the problem in my mind.
    As a sovereign currency nation, Australia is constrained, not by dollars, but by resources.
    So the decision on the poor, etc could just as easily have been to give them better welfare.
    As could the decision to bring back free health care, free education etc
    As could the decision to stop selling public assets – while state governments are dollar-constrained, the federal government could buy/retain, or fund the states to buy/retain, those public assets.
    We wouldn’t be discussing electricity prices now if this had happened.

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