Australian workers will be able to access the age pension sooner than expected, after Prime Minister Scott Morrison revealed this morning his government will scrap a plan to lift the retirement age to 70.
The Coalition first flagged its intention to lift the eligibility trigger for the age pension from 67 to 70 back in 2014 under former Prime Minister Tony Abbott, and in June 2017, the government was still committed to making the change.
However, Morrison said during an appearance on Nine’s Today Show this morning “the pension age going to 70 is gone”.
“Next week, cabinet will be ratifying a decision to reverse taking the pension, the retirement age, to 70. It will remain at 67,” Morrison said.
“I don’t think we need that measure any longer when it comes to raising the pension age, and that’s one of the things I’ll be changing pretty quickly.”
Morrison was responding to a question from a viewer who asked him why he “thought it was a good idea to have everyone working until they are 70”.
“Well, I no longer think it is,” the new Prime Minister said, adding that he was planning to make an announcement to this effect next week.
The pension age, or preservation age, is currently set at 65 but it is due to incrementally increase to 67 by 2023, under changes made by the previous Labor government.
Moving the eligibility age from 67 to 70 was slated to save the federal budget $3.6 billion in its first four years.
Speaking on Sky News, Deputy Prime Minister Michael McCormack described the change in policy as a “pragmatic, sensible move”.
“I think if you are a tradie, or a brickie, or a shearer in rural and regional Australia, you don’t want some suit in Canberra telling you that you are going to have to work until you’re 70,” he said.
“It’s hard, back-breaking work what a lot of our people do and I think being told that they are going to have to work until 70 I think was probably a step too far.”
But Opposition Leader Bill Shorten questioned if the Prime Minister really believes in the new policy position.
“Scott Morrison was the treasurer and wrote the last three budgets. He wanted to increase the retirement age to 70 from the first time it was suggested,” Shorten said during a press conference.
“Is he the man who was the treasurer for the last three years or is he someone different now? Scott Morrison needs to explain what he really believes in.”
Speaking to SmartCompany, Paul Drum, general manager of external affairs at CPA Australia, said while many will welcome this news, the policy changes makes the issue of tax reform even more pressing.
“The announcement that the pension age will not be increased above 67 will be welcome news by those who are planning for their retirement, however, it should not lull anyone into any sense of financial security,” says Drum.
“As the average life expectancy continues to rise, retirement savings will need to last longer.
“The proposal to increase the pension age to 70 was originally made in 2014 to reduce the future financial pressures on government due to an ageing population. That issue has not gone away.
“In the absence of the capping of government spending in some meaningful way, today’s announcement just makes the necessity for increased government tax revenues — and tax reform — even more important, and inevitable.”