Right: raising the retirement age has practical problems in a world of changing technologies and, indeed, new kinds of jobs. Just as some younger job applicants are hampered by a lack of experience, many older persons are similarly handicapped by being unfamiliar with the communications technolgies that have become part of most workplaces.
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Arguments against increasing the retirement age to 70
1. Claims about the unsustainable cost to taxpayers of age pensions are exaggerated
Age-related pension spending is projected to increase by about 1.2% of GDP over the next 40 years from their current level of 2.7% of GDP. It has been noted that this is a small increase, amounting to an average 0.03% per year over 40 years.
It has also been noted that relative to comparable countries, Australia currently spends very little on age pensions. Our current pension spending is less than half of the OECD average and the projected growth rate to 2050 is also about half the OECD average.
It has also been observed that Australian incomes and thus tax payments have increased, making Australia better able to fund age pensions. National income per person has increased by at least 1% per year in Australia, in real terms, over each of the past 4 decades.
A 1.2% of GDP increase in pension costs would amount to about two years worth of income growth out of the next 40 years. It would be like an income freeze for all Australians for just two years of the next 40 in order to pay for the increase in public pensions.
Further it has been claimed that the 'dependency ratio' is not changing in the way that has been claimed. The 'dependency ratio' is the number of pension recipients relative to the number of taxpayers available to support them.
In an opinion piece published in The Australian on May 5, 2014, Henry Ergas, has stated, 'Claims about increases in dependency ratios are wildly exaggerated: while the share of older people in the population is rising, the share of children has fallen, so the ratio of dependents to the working age population is no higher now than at federation.'
Ergas has also observed, 'Moreover, the share of women who work has risen dramatically, while days lost to injury and illness have decreased, so the effective labour force is a far greater proportion of the working-age population. As a result, dependency ratios, properly measured, have been falling, not rising.'
It also needs to be noted that the longest living Australians are also, statistically, the wealthiest and that this group does not generally draw on taxpayer-funded pensions. Australia is the only OECD country where the public pension is income-tested and excludes most of the highest-earning 20 per cent of people over sixty-five.
2. There will be many who are unable to work beyond 65
Concern has been expressed for those older Australians unable to work who will find themselves without either an income or an age pension under the new provisions. Of particular concern are those in demanding, manual jobs who are simply physically unable to continue working beyond 65 (or, as was intended to be the case by the former government, 67.) Also at risk are those with limited skills, who work in contracting fields or who are the victims of age discrimination.
Charmaine Crewe, policy adviser for the Combined Pensioners and Superannuants Association, has described a higher pension age as a cruel and unfair measure that would condemn many to live in poverty.
Ms Crewe has stated, 'Our concern is for people who are in physically demanding jobs; they may be laborers or nurses. To ask them to slog it out for another three years is a cruel policy.'
Ms Crewe has also claimed. 'With age discrimination favoring younger workers, many older people would have no choice but to survive for years on unemployment benefits, which are less than the age pension. We're going to see a larger number of older people thrown into poverty, and we just don't think that's fair.'
Susan Ryan, Australia's Age Discrimination Commissioner, has indicated that without a change in attitude among employers toward older employees, increasing the pension age to 70 will cause significant disadvantage.
Ms Ryan has stated, 'The argument for longer working lives relies not only on ability, skill, aptitude, willingness or physical capability. It also relies on the willingness of employers to give older workers a fair chance to compete for work on the basis of merit.
Before we ask most people to work longer, we need to ensure the barriers and impediments in the entire system surrounding employment are removed. Right now systemic barriers and negative attitudes remain firmly in place.'
Cassandra Goldie, the chief executive officer of ACOSS has stated, 'About 40 per cent of all men and more than 50 per cent of women aged 55 to 64 fall into the at-risk category: they can't get paid work or can't work anymore because of sickness or disability, caring responsibilities, or other reasons beyond their control.'
Ms Goldie went on to indicate that while ACOSS acknowledges the Government's need to reduce expenditure, the 'pension is a vital shield against poverty for some older people.'
Summarising ACOSS's position, Cassandra Goldie has stated, 'The government has a stark choice in this coming budget: it must target payments to people who really need them, not force people at the bottom of the income scale, struggling to survive day to day, to accept even less income in retirement, either because they can't get paid work or can't work any longer.'
3. If the pension age is raised to 70 Australia will have the oldest, and among the unhealthiest, workers in the world
According to the most recent edition of the OECD's Pensions at a Glance, seventeen out of the thirty-four OECD countries have legislated for increases in pension ages above sixty-five. Only Iceland and Norway are currently at sixty-seven, but Australia, Denmark, Germany and the United States have plans to match them, and Britain has announced an increase to sixty-eight.
Finland currently makes its population work to 68, the highest age in the world to this point, before being able to claim a pension. In November last year, Greece undertook a series of austerity measures and raised its retirement age from 65 to 67. Denmark has the same retirement age.
When Australia's latest proposed changes come into effect, Australia will have the oldest access in the world for age pensions.
There has been concern expressed that these older Australian workers will suffer ill health and have diminished capacity to contribute to the workforce. Australian Institute of Health and Welfare figures show that more than a third of people aged between 45 and 64 have a chronic health condition.
A January 2014 report produced by the National Seniors Productive Aging Centre has stated, 'As people age, they are more likely to have poorer health and research has shown that this can be a key obstacle to them continuing in the workforce. A recent report found that about 660,000 people aged between 45 and 64 years were not working because of ill health.
While these people would benefit the most from being in the workforce, they may not be able to remain working effectively.'
Professor Mark Harris, executive director of the Centre for Primary Health Care and Equity at the University of New South Wales has stated, 'As the number of older workers grows - as predicted with a shift to a pension age of 70 - so too will the proportion of people in the workforce affected by conditions such as heart disease, cancer, diabetes, arthritis, osteoporosis, cognitive problems, as well as vision and hearing loss.'
Professor Harris has also claimed, 'Age-related health problems aren't just an issue for those doing hard physical work; they can potentially impair performance for any job - especially those requiring extended concentration. It really does apply to all workers.'
Professor Harris has further stated, 'As we get older [health] becomes more unpredictable. There is an element of chance. The more you roll the dice [with every extra year of living], the more the chances keep accumulating.
Increasing the pension age from 65 to 67 [as is being phased in from 2017 to 2023] was pretty non- controversial. But [in] increasing it by another three years, we're starting to get into a situation where the risks are greater. So we need to be more thoughtful about that.'
4. Working for longer may not contribute to physical and mental health
It has been argued that many of the claims made for the supposed health benefits of longer working lives are dubious.
A 2010 Swedish study has found that retirement leads to a substantial reduction in mental and physical fatigue and depressive symptoms. This Swedish study consolidates concerns that have long been expressed about the frequently made claims that workforce participation improves the health of the elderly.
Claims that retirees are less healthy both physically and mentally than those still in employment are regarded as questionable largely because those who take retirement frequently do so because they are already experiencing ill health. Those who chose to remain in the workforce beyond the age at which they might retire are, therefore, likely to be physically and psychologically in better health already than those who do not. Thus, it may well not be either retirement or workforce participation that is responsible for the health status of either group.
The Swedish study was also wary of making claims about the health benefits that might be derived from retirement. Dr Westerlund has stated, 'It is too early to make definite claims about positive or negative benefits from retirement at a particular age.'
5. Extending the pension age is socially discriminatory
It has been claimed that increasing the pension age to 70 would discriminate against the less wealthy in our society.
Typically the less wealthy live less long than those who have greater financial assets. Research commissioned by Catholic Health Australia (CHA) in 2010 found a person's socioeconomic status is the single biggest indicator of life expectancy and health status.
It found those in the lowest socioeconomic group die three years earlier than the rest of the nation, and the discrepancy has little to do with access to doctors or hospitals. It has been suggested that relative poverty equates with less knowledge of or access to the factors that create a healthy lifestyle and thus prevent illness.
On May 2, 2014, The Conversation published an opinion piece by Rafal Chomik, Senior Research Fellow, ARC Centre of Excellence in Population Ageing Research, University of New South Wales at Australian School of Business. Mr Chomik noted, 'North West Victoria, with the lowest average salary has a life expectancy of 4.7 years less than North Sydney-Hornsby - part of Joe Hockey's electorate, which has both the highest salaries and life expectancies.
The Queensland and Northern Territory outback regions have the lowest levels of life expectancy because of the starkly low life expectancy of indigenous Australians.'
Mr Chomik went on to argue, 'A more robust analysis comparing incomes of individuals with their mortality also reveals a link between socio-economic status and life expectancy. It shows a gap of about 5 years between those in the lowest and highest quintiles of the income distribution.' Mr Chomik's claim of a five year difference in life expectancy dependent on wealth is even greater than the three year difference claimed by the earlier Catholic Health Australia study.
Critics of an increased pension age claim it is socially discriminatory because the increased longevity which is used to justify it is not being enjoyed by the relatively poor. Thus, if the pension age is to be increased by three years, those who already live up to five years less than their wealthier fellow citizens will be significantly discriminated against in terms of the length of retirement they will have available to them.