23.
Retirement in Australia
Australia's population aged 65 years and over is projected to increase substantially into the next century. In 1993, 12% of the population was aged 65 years or over. This is projected to increase to 14% by 2021, rising to 22% by 2041. In the absence of any increase in retirement saving, the projected increase in the proportion of the population over age 65 could cause significant pressure on outlays and the maintenance of adequate social security payments.
These demographic shifts are occurring in conjunction with major changes in labour force participation for both men and women, including:
• a general decrease in the participation rate for men;
• a general increase in the participation rate for women;
• increasing importance of part-time and casual employment;
• women being older when they have their first child;
• longer periods spent in education by the young; and
• early retirement.
Labour force projections show a significant increase in full-time and part-time employment at older ages as the 'baby boomer' generation moves through. A move towards self-employment at older ages has also been noted. In recognition of women's increased labour force participation, the age at which they can qualify for the age pension is being progressively increased from 60 years to 65 years.
There is an increasing trend towards earlier retirement, that is, withdrawal from the labour force before age pension age (65 years for men and 61 years for women). According to data from the Australian Bureau of Statistics, in 1994, 74% of men and 87% of women had already retired from full-time work during the five-year period preceding their eligibility for age pension. This may be voluntary or, alternatively, given the major restructuring of the economy over recent years, many older workers may have been retrenched, with little possibility of re-entering the labour force.
There is no statutory retirement age in Australia. The retirement incomes system envisages a possible span of retirement starting between the ages of 55 to 70 years during which retirement savings can continue to accumulate or retirement income can be accessed.
Age at retirement of retirees from full-time work, Australia 1994
| Age | Less than 45 | 45 - 49 | 50 - 54 | 55 - 59 | 60 - 64 | 65 - 69 | 70 and over | Total |
| Males | 91,900 | 68,400 | 120,400 | 248,500 | 410,400 | 288,600 | 40,900 | 1,269,100 |
| Females | 1,061,100 | 162,900 | 206,100 | 208,500 | 179,400 | 46,600 | 12,400 | 1,877,000 |
| Total persons | 1,153,000 | 231,300 | 326,500 | 457,000 | 589,800 | 335,200 | 53,300 | 3,146,100 |
Age regulations and qualifications governing superannuation and social security systems
| 55 | Age to which superannuation entitlements are compulsorily preserved. From age 55, preserved superannuation becomes available upon retirement. For people aged 55 to 60 years, Regulations under the Superannuation Industry (Supervision) Act 1993 define retirement as permanent withdrawal from the workforce. A phased increase in the superannuation preservation age to 60 is to begin in 2015 and will affect people born after 30 June 1960. By 2025, people born after June 1964 will be subject to a preservation age of 60 years. |
| People aged 55 years and over can access a range of social security pensions and benefits depending on their circumstances, e.g. Disability Support Pension, Newstart Allowance, Carer Pension and Widow Allowance. From September 1997, superannuation assets of those aged 55 and over will be taken into account under the income and assets tests after 9 months on income support (pending legislation). | |
| 60 | Under SIS Regulations, after age 60, retirement may be taken to have occurred upon cessation of a period of gainful employment even if the person intends to re-enter gainful employment. Current qualifying age for Mature Age Allowance. |
| 61 | Women's current qualifying age for age pension. The age pension age for women is being slowly increased to 65 over the next 17 years (reaching 65 years in July 2013). |
| 65 | Men's qualifying age for age pension. |
| 70 | From 1 July 1997 people will be allowed to continue to contribute to a regulated superannuation fund up to age 70, provided they are gainfully employed for at least 10 hours per week over the year. |
References/further reading
Rosenman L, Warburton J 1995. The changing context of retirement in Australia. Social Security Journal, December, 54 - 66.
Ryan A 1995. Early retirement and the optimal retirement age. Melbourne: University of Melbourne, Department of Economics, October.
Data sources
Data presented here are drawn from Australian Bureau of Statistics 1995, Australian social trends 1995. Cat No. 4102.0. Canberra: AGPS; and unpublished data from the Australian Bureau of Statistics and the Department of Social Security.
Prepared by Department of Social Security
