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Grattan Institute plan delays access to superannuation and aged pension until 70

The Grattan Institute proposal would lift the age of access to superannuation.

The Grattan Institute proposal would lift the age of access to superannuation. Photo: Jessica Shapiro

Australians would be denied access to both superannuation and the age pension until they turned 70 under a radical plan that goes far beyond the one proposed by the Productivity Commission last week.

The pension access age is currently scheduled to climb six months from 65 to 65½ in 2017. After that it will climb six months every two years until it reaches 67 in 2023.

A new proposal from the Grattan Institute would double the pace from 2017 onwards, lifting the access age by six months every year until it hits 70 in 2025. After that it would be progressively lifted further in line with increases in lifespans, with no ultimate limit.

Developed parallel to, and without knowledge of, the Productivity Commission plan, the Grattan Institute proposal would also lift the age of access to superannuation. The super access age is already scheduled to climb from 55 to 60 by 2024. But Grattan would increase it by six months every year from 2015 until it hit 70 in 2035. Then it would index the access age to rise automatically.

Its report, Balancing Budgets: Tough Choices We Need to Make, released on Monday, identifies 20 proposals to repair the budget, and finds lifting the pension and super access age the most attractive of the lot. It would save an extra $12 billion a year in today's dollars when the benefits were fully realised - about a fifth of the $60 billion annual shortfall it says the budget faces.

It would also boost economic activity by up to 2 per cent.

The institute conceded that ''some who would prefer to stop working earlier will not be able to afford to do so''.

All of its top four proposals take benefits or concessions from pensioners or superannuants. Between them they would save the budget $28 billion a year - almost half the sum needed.

''Many things are worth doing, but they don't save much money,'' Grattan Institute chief executive John Daley said. ''Attacking so-called middle class welfare is one. You could take away Family Tax Benefit B from the high-income families that don't need it, but you would only save around $500 million per year. That's nothing compared to what Australians over 60 get through superannuation and the assets test. Australia does have a middle class welfare problem, but most of the recipients are over the age of 65.''

As part of the assault on aged welfare, the institute would also add to the pension means test the value of the family home.

It said almost half of all pension payments - about $20 billion - go to households with net assets of more than $500,000.

The institute said the current assets test encourages older people to stay in houses that are bigger than they need.

Those excluded from the pension by the change would be offered the option of continuing to receive it in return for allowing the Commonwealth to accumulate an interest in their property, which it would take in cash when it was sold. The change would save $7 billion a year.

The institute's other proposals include removing the 50 per cent discount on capital gains tax ($5 billion) and extending the Goods and Services Tax to cover food and privately provided education.


  • wot a wonderful, wonderful idea. read between the lines - work and have your income stripped from you [tax] up until the very day you die is the "economic ideal" in play here. all for the sake of your [cough-cough] altruistic government continuously and deliberately overspending in order to increase the debt burden on the tax payer, as if you were ever going to get out of debt [ha!]. i say let the politicians with their super welfare schemes [or is it scams?] have this simply sordid deal apply immediately, as a test. better still, stripped completely so that they can live the same life as the peons. wot a stinking joke it all is.
    grattan institute? of what? skullduggery.

    Date and time
    November 25, 2013, 6:53AM
    • Very commonsense suggestions from the Grattan Institute.
      Ultimately, superannuation should be 'reformed' until it is possible to do away with the aged (welfare) pension altogether. People must learn to look after themselves but through systems, such as super, health etc, share the risks of adversities. It's called Social Insurance.
      Including the family home in the asset test for an aged (welfare) pension should have happened a long time ago, although there could be a standard free threshold.
      As it is now there are many asset-rich and income-poor pensioners, living in million-dollar houses, having structured their finances deliberately to benefit from the 'pension'.
      What a rort.

      Date and time
      November 25, 2013, 11:16AM
    • I think many of you are forgetting that the Pension is actually being paid for. When it was introduced, people were taxed a specific percentage which was put in to the "social security benefits" bucket and that money was collected specifically for pensions.
      That bucket of money was later rolled over into the big bucket called "income tax, general revenue". These days that big bucket makes no reference to this money which was specifically raised for social security benefits and some people (the haves) bleat about raising the retirement age. It may "work" for the people who have never laboured in their lives, but it is a death sentence for the people who have laboured all of their lives.

      Date and time
      November 25, 2013, 11:52AM
    • Well said, smite. Pollies first, we'll follow.

      Date and time
      November 25, 2013, 12:05PM
    • Smite, the Grattan Institute of out of touch with reality.

      Date and time
      November 25, 2013, 2:23PM
  • I haven't read the proposal in detail, but did it perhaps also suggest that the medical reasons for being able to access super on the grounds if invalidity be tightened?

    Date and time
    November 25, 2013, 7:23AM
    • Probably, given the whole thing seems to be designed to avoid people actually having a decent existence.

      The illness clause is there for good reason, but I've read of instances where it's been barbaric.

      Date and time
      November 25, 2013, 8:44AM
    • Lex - it is pretty hard to get your hands on your super prior to age 55. You also get penalized by the tax man for doing so. People in that situation must be pretty desperate and I feel for them.

      pragmatic prince
      Date and time
      November 25, 2013, 11:21AM
  • First Govt. pensions, fair enough, but now personal Super.

    Listen up...........HANDS OFF MY MONEY !!!!!!!!!!!!!!!!!!!!!!!!!!!!

    Date and time
    November 25, 2013, 7:26AM
    • not your money. remember the gov contributed to it as well. as sure as the sun comes up in the morning they will tax your super and keep it from you as long as possible. its called a ponzi scheme. sucker people into handing over money by promising great returns. then slowly but surely figure out ways of keeping it from them until the inevitable. oops - sorry its all gone! bwa ha ha ha and the fund managers walk away scott free.
      its law and you cant do anything to get it. its gone.

      Date and time
      November 25, 2013, 10:08AM

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