Expect to Work Longer under a Labor Government

Despite being lauded as a relatively sensible move by economists, the Prime Minister Kevin Rudd is set to have a battle on his hands over his plans to introduce the pension eligibility age from 65 to 67.

The Prime Ministers’ plans to increase the pension eligibility age are in line with similar changes in other nations as average life expectancy rises and our ageing population grows.

However, according to reports in The Australian, The Construction Forestry Mining and Energy Union (CFMEU) have written a “strongly worded” letter to the PM citing their disapproval of the proposed changes.

In their letter to Mr Rudd, CFMEU national secretary John Sutton and AMWU national secretary Dave Oliver warn it is unfair and unrealistic to expect 65-year-olds to work in heavy labour.

The letter, obtained by The Australian, urges the Government to dump the idea and instead wind back tax concessions on superannuation contributions to raise revenue.

Mr Sutton said lifting the pension or superannuation eligibility ages would be electoral poison.

“It’s a bad policy,” Mr Sutton said.

“I strongly anticipate the Left would reject it as a policy. Many in the party would reject it as a policy. As far as I am concerned, it is an industrial issue.”

Mr Sutton said Mr Rudd’s plans had angered his members and would “go down like a lead balloon” in the community.

“You are talking about people who have worked nigh on 50 years and they are now being told it will be compulsory, you will not be able to access the pension until later life. I just think that’s a bridge too far.”

Mr Sutton said the unions would raise the issue at next month’s ACTU national congress and the ALP national conference in July, insisting workers regarded access to the aged pension at the age of 65 “a fundamental right” that ought to be protected by a Labor government.

However, on the issue of the pension age, Mr Rudd was unmoved last night.

“Increasing the pension age is a responsible reform to meet the challenge of an ageing population and the economic impact it will have for all Australians,” Mr Rudd said.

“Australia’s shift in pension age is in line with what is happening all over the world. The United States, Germany, Norway and Denmark are moving to a pension age of 67 years and Britain is moving towards 68 years.”

According to the Australian, ACTU president Sharan Burrow said workers’ bodies were often “broken” long before they turned 65.

“Of course, in the 1991 recession, we lost a lot of people who never came back to work and they were languishing there on disability support pensions until they retired,” Ms Burrow told the Ten Network’s Meet the Press program.

She also said any change to the age at which people could access their superannuation would be counter-productive.

“You need people to mix income in work, in retirement incomes, flexible, part-time work. All of those choices should be there as people get towards that retirement era,” she said.

Of course, what all of this fails to take into account is the recent “transistion to retirement” changes which were introduced under the Howard Government a couple of years ago.

The transition to retirement rules allow (depending on certain eligibility criteria) individuals the opportunity to begin to access their superannuation retirement savings from the age of 55. This may be received in the form of an income stream while still participating in the workforce.

Furthermore, given the increasing life expectancy and growing proportion of elderly versus working younger people is it really such an outrageous move to increase the pension eligibility age by two years?

To me this is just another signal that for people who are currently in the thirties or forties now, it would be optimistic to think that there will be any any meaningful financial support in terms of a Government pension by the time they reach retirement age. In other words, get ready to fend for yourselves. Then again wasn’t that what compulsory Superannuation was all about in the first place?

58 Responses

  1. Of course its going to be impossible to expect 66 year-olds to perform heavy labour. That’s a recipe for disaster and any Employer who does so is likley to find himself on the wrong-end of a damages suit or expensive Compo claim when Old Joe buggers his back.

    That being said, the effect of the change might not be as disasterous as made-out. It will depend on when it’s phased-in.

    If it comes-in 20 or 25 years from now, presumably the vast bulk of the workforce will have had the benefit of Compulsory Super contributions for neigh-on 40 years. They should have a tidy nest-egg, even on labourer’s wages (which aren’t peanuts these days).

    If they spring-it on us 5 years from now, that’s another story. In that case there will definitely be disadvantaged people with inadequate Super. And they’ll be the usual suspects: The poorest amongst us.

  2. The unions argument against this is stupid if you look at the heart of it. They are basically saying that at exactly 65/66 everyone is instantly burnt out. The radio interview I heard where they had a 60 odd year old construction worker saying all the young workers were dead against it as they didn’t want to suffer heavy work at 67. The unions also gave an example of workers starting at 15 to get a total of 50 years hard labour for the burn out figure of 65. I didn’t know we still sent kids down mind shafts and had them slaving in cotton gins.

    This specious argument line totally overlooks that people are living much longer, but more importantly are far healthier and fitter at 60 than they were at 50 when the 65 retirement age was legislated, which I believe was an update in response to people living longer back then.

    Also most workers don’t want to retire at 65 and go on working or they find other things to do in retirement to keep occupied, and that can involve heavy labour.

    This is where I agree with Tom on where unions can fail, and it’s a good example of it, by attempting to have a one size fits all and going the heavy (like threatening the Rudd government) to impose that one size on all, especially on a construct that was worked out and calculated on a distant past diaspora, and the unions want it to remain in that era when the diaspora has a long time since moved on and become something else entirely, but the unions in question in this instance haven’t moved with them.

  3. Evan, the proposal is to phase it in over 6 years from 2017.

    Under changes announced tonight, the age at which people qualify will increase at a rate six months every two years, beginning in 2017 and reaching 67 years in 2023.

    The first to be affected by the 67 age limit will be those born in 1957. I’m a ’58 born and I think it’s a necessary change.

    Raising the superannuation preservation age is another matter (which is the subject of Mr Henry’s deliberations) – I reckon they should leave that at 55 – if people have saved enough in the super environment by 55 to retire, they should be able to do so.

    I’d be interested in TB’s take on this (being an early self-funded retiree).

  4. Take it to the conference floor! Spill some blood!

    I’ll blame Swan & Gillard.

  5. “To me this is just another signal that for people who are currently in the thirties or forties now, it would be optimistic to think that there will be any any meaningful financial support in terms of a Government pension by the time they reach retirement age”

    I don’t mind, I doubt I’ll live to 67. I would like them to impose this neat little idea now though.

    If it’s OK for me to “fend for myself” why not for those pre-’57. Too politically suicidal at this point in time?

  6. But Tom – I thought they were beholden to the Unions (BOO!)… why would they make a decision against the unions?

  7. The Prime Ministers’ plans to increase the pension eligibility age are in line with similar changes in other nations as average life expectancy rises and our ageing population grows.

    Ageing population is a problem in most western countries, which aren’t meeting even their zero growth fertility rates. Families and couples should be given incentives to have more children, even in the form of cash bonuses.

    Oh wait…

  8. The topic of unions arises eh? Cue Tom of Melbourne.

    … Wait; too late. Already here!

  9. The answer has already been developed and we should adopt this as policy………………………

    http://en.wikipedia.org/wiki/Logans_run

  10. People might be living longer, but is the quality of that life any better particularly for 60+yos?

    I would say that many in that gap between 65 & 67 (and earlier – any non-professional 60yos tried to get a full-time job recently?) will spend it on the dole.

  11. It’s a good point Daphon.

    I just went to get my lunch from my local sandwich shop, and was surprised to see this guy working behind the counter who must’ve been in his 80’s (at least).

    All the other staff are all these bright n’ bouncy young energetic UNI student types that are flying all over the place whipping up sandwiches and tailor-made pide rolls faster than you can say “some extra tzataziki dip please.”

    Of course, my first reaction was, “look at that poor old soul. He’s probably lost everything and now has to work in a fricken’ sandwich shop at his age to make ends meet it’s a bloody disgrace!”

    But then I thought, good on the shop owner for giving him a chance. And for a brief moment a warm, cozy feeling decended upon me.

    And then my sandwich was handed over, and I completed the transaction by exchanging some cash, I thought, “these youngsters are gonna leave that old guy for dead.”

    Turning to leave I thought “that may well just come to pass”.

    I guess I’ll find out tomorrow if he’s still there…

  12. Hey reb, notice that Daphon is a friend of ours?

    Welcome Daphon.

  13. A worthy observation IATW.

    Soilent Green is yum, yum.

  14. I haven’t read the comments on this thread yet, so I hope I’m not covering ground that has already been traversed, but . . . how come nobody publicly complained when Howard increased the female retirement age (incrementally) from 60 to 65?

  15. Indeed Joni.

    Welcome Daphon too!

    Joni I’ve sent some stuff to your Mac email ddress…

  16. Daphon, on May 25th, 2009 at 1:12 pm

    Not when older job seekers are just about all employers have to chose from, which is a time rapidly approaching.

    —————————
    That’s right Tony the old economic rationalist argument (you know the ones who got us into the GFC), populate for the economy. Don’t matter that the infrastructure is crumbling around you, the environment is rooted because of over population, you have to pay an arm and a leg for the scarce water which is mostly supplied through desalinators, you have to live in high rise shoe boxes and personal space is considered generous if you can’t see the ear hairs of the people around you. As long was we breed lots of consumers to use up the remaining finite resources as quickly as possible so we can continue to create economic bubbles to give 5% of the population 30% of the world’s wealth.

    And wasn’t that scheme just a lot more middle class welfare to buy votes at the cost of long term infrastructure this country so desperately needs?

  17. Welcome Daphon. Anyone who’s a friend to reb and joni is a friend of mine.

  18. Either Miglo goes or I go..

  19. By popular opinion, reb, I think it’s you.

  20. Right, that’s it. Eff youse all….

  21. Look at the positives reb. At least you’ll have time to finish painting the house now. Or had you planned to do that when you retire – at 67.

  22. Adrian,

    And wasn’t that scheme just a lot more middle class welfare to buy votes at the cost of long term infrastructure this country so desperately needs?

    No. It was designed to solve the other problem you identify in that same comment:

    Not when older job seekers are just about all employers have to chose from, which is a time rapidly approaching.

  23. You had to bring up the painting didn’t you.

    You’ll be pleased to know that I’m making some progress.

    I set up the scaffolding in the weekend, so that I can reach those tricky high bits.

    KAMAHLODERATOR: You and the duck. Back on topic. Now please.
    .
    Oops, Sorry Kamahl….

  24. Hi Daphon..and likewise welcome! Re any non-professional 60yr olds trying to get a full-time job recently. Hubby is 61yrs old and in the last few years hadn’t had as many problems obtaining employment as say 7yrs ago. The reason being, there is a skills shortage in his area..that is, he is an Instrument Fitter.

    Once upon a time if someone was over 50yrs you couldn’t get a start on the mines but over the years so few fitters & turners, boilermakers etc were trained that age isn’t an issue. As long as you can pass the medical, then you have a start.

    Off topic: Did anyone else notice that 457 Visas have gone down the tube. It would seem that a good possibility is due to the Rudd government bringing in (from this September) that holders must be paid market rates. With apologies, I can’t find the link but I believe that the reduction in applicants has been fairly substantial.

  25. Nice to see you have a cop guarding the scaffolding. Does he have orders to shoot to kill?

  26. Notice to Kamahl.

    I note that Reb is the author of this site. He can talk about anything he wants.

    Bitch slap to you.

  27. Does he have orders to shoot to kill?

    Yes, especially anyone called Tom or anyone singing “the elephant song”

    Hear that? Kamahl…???

  28. Kamahl: umm scaffolders are going to have problems working until they’re 67yrs??? Traadaa..back on topic.

  29. No Tony that is not a problem. Workers can now work well beyond 65 but there is a bias to hiring them. When employers have no choice then we will have an older workforce and be none the worse off for it.

    The pushing of increasing population is made by economists purely for economic reasons (read greed) without any consideration if the country can sustain that many people or the resources can last. 60-80 million for Australia is the number often bandied around by economists. Why do you think that the older demographic are not desired for advertisers and Channel 10 even though it mostly comes third in the ratings is making a good profit because it mostly attracts a younger demographic. Same forces at work that have economists say we must have a young demographic, and its all to do with consume at any cost so some can become wealthy(ier) quickly(er)

    So you see employers having to use older workers as a problem, I don’t and see it as an asset.

  30. Adrian,

    I see ageing population as a problem, for a number of obvious reasons.

    To solve it you can either get rid of old people, or get more young people.

    There are two ways of achieving the only viable (second) option: immigration, and raising the fertility rate.

    It is good public policy to offer ‘baby bonuses’ which encourage women to have more children.

    The total fertility rate in Australia, peaked at 3.5 children per woman in 1961 but has fallen almost continuously since, reaching a level of only 1.75 in 2003.

    Below-replacement level fertility rates are a concern in many industrialized countries because of negative consequences of a shrinking workforce and a rapidly aging population.

  31. Thank you for the welcome, folks. Very kind of you.

  32. Kamahl,

    Would you kindly get my last comment out of the spamulator.

    k thnx

  33. It’s interesting that the population is aging, baby-boomers being the largest sector, yet entertainment, particularly movies, are aimed at younger people for the most part.

    Many times over the last couple of years I’ve found it hard to rent a DVD because so many of them are teenage and/or horror movies.

    And the group that is the target of today’s entertainment – Ipods, mobile phones, designer clothes, alcohol etc., on which they spend unbelievable amounts of money – are the same ones who complain they’ll never be able to afford their own home.

  34. Interesting table Tony..thank you for posting it. Italy 1.3?? A Catholic nation! Must be a lot of abstinence happening there.

    On a more serious note, countries with troubles such as Uganda and Afghanistan have extremely high birth rates. As per many 3rd world countries due to very high infant mortality rates.

  35. The point has to be made – what would these union hacks know about work?

    They know plenty about rorts and political deal making.

    The concept of work? I don’t think so.

  36. The point has to be made – what would these Liberal politicians know about work?

    They know plenty about rorts and political deal making.

    The concept of work? I don’t think so.

    See, nonsense rhetoric is so easy – it just writes itself doesn’t it?!

  37. Daphon

    I agree wholeheartedly. Young people today know very little about managing expenses and balancing the household budget. I do not understand why they should expect Government funded subsidies to purchase a home if they cannot demonstrate the maturity and discipline that is required to save for a deposit like we had to. It seems as though young people today expect everything to be handed to them on a plate without having to put in the hard yards to earn it. Instead they simply squander money willy nilly on the pokeys, liquor and cigarettes and then wonder why there isn’t enough money leftover for groceries and other household bills.

  38. I’d be interested in TB’s take on this (being an early self-funded retiree).bacchus, on May 25th, 2009 at 12:17 pm

    Thanks for the cue, bacchus.

    I just lost a 10 minute post…grrrrr.

    I’m fully self funded ’cause I don’t trust governments of any colour…I started work at 15 retired at 56…

    …my own business in 1992 (just after I graduated), so no 9% super for me or The Minister…

    …the first 16 years were in the auto trade (including two years NS in RAEME working on armoured vehicles)….

    … at 61yo I can assure those days of lifting engines, gearboxes and diffs etc and loud noises and chemicals have come home to roost in muscles, joints, tinnitus and respiratory issues etc.

    I believe:

    Pensions should be based on years of service – eg 45, not age…

    Although males are supposed to live until 81 and females 84 – this is my experience with my generation:

    My best mate, 33, cancer
    My brother in law, 46, heart attack
    A mate’s mother, 39, anurism
    A mate’s brother, 46, aurism
    Sister in law, 59, cancer

    Back in the fiffties a man would retire at 65 and die at 67…cannon fodder, feed the machines, make the profits…

    …what about living, nurturing a family, enjoying the world around you…

    …when politicians and public servants have the same retirement conditions (yes, you, N5 and Miglo!) then I will agree with 67…

    …if compulsory superannuation were raised to 15% and coupled with a government controlled fund offering 5-6% then all the dramas of the last couple of years could be reduced if not eliminated…

    …a fund like this could also provide monies for governments to borrow for infrastructure projects (nation building) putting pressure on banks to perform…just don’t let private enterprise anywhere near it!

  39. correction I retired at 58 – 59

  40. I certainly agree Daphon and Mobius about the younger generation being the advertisers’ target of choice. Obviously market research has indicated that baby boomers are a stingy bunch who are less likely to be bothered with designer clothes and DVDs. This contradicting some opinions which appear in the popular press that the baby boomer generation are wastrels who chose not to plan for retirement.

  41. Kate. I have to stick up for the young’uns a little. Both of my daughters have mega HECS debts. Son is a leading seaman in the Navy with a 5 month old daughter and there is no way that he can afford housing repayments even though he and partner qualify for $17,000 from the Navy plus the 1st home buyers grant. Houses are just too expensive unless you have 2 incomes. Ok, so they should have planned things better, but sometimes life has it’s ‘little surprises’.

    The above differs from ‘my day’. One with a struggle could afford housing repayments on only 1 wage and I was paid for my 3 years tertiary education, that is I originally trained as a primary school teacher where we were paid via a studentship.

  42. TB, when compulsory super was introduced it just looked like another industry to feed off the people to me and look at what it has become.

    I wonder how much of our super is overseas being used to create wealth that never transfers into our society.

    Just imagine what could be achieved in all these years if there was a super, Super fund that was utilised to create a peoples bank and a development bank?

    Same with this Future Fund, it could have been utilised and provided a return far better than what we are getting now and still have the available funds to fulfil the stated purpose.

    The sticking point would have been the government of the day abusing it for its political gain and mismanagement…it could have and still could be done and have the oversight of a Senatorial Committee comprising of members from all political parties to ensure it was managed wisely.

    As for this 67 retirement to incrementally commence in 2017, well it seems a long way off and circumstances and governments change and I am a bit puzzled why this government announced it in the first place.

  43. Min, took The Minister and I three years to save enough for a deposit and the then, $500 First Home Buyers Grant…we were married with a baby on the way she was 19 I was 21 and just completed my apprenticeship…owed $1600 (two cylinder Honda Scamp) and had $300 between us – I went in the army at 22 and my pay was $88 per fortnight – from $79 per week…by that time we were also paying off a block of land…

    …my point is a family motto…”there’s always a way…”

    …and of course “nils illegitumus carborundum” – don’t let the bastards grind yer down… 🙂

  44. TB..hubby and I got engaged in ’74 and we paid off a block of land in Mt Evelyn Vic. It cost $7,000. We married in ’75 and built the house in ’77..did a deal with the builder to do our own painting to save money. Baby sleep times consisted of filling in nail holes and carting loads of soil.

    Was just talking about this with hubby..his first pay slip in today’s money was $10.75. Our first car was a Honda Civic.

  45. Thanks to my first wife I’ll be working until I’m 75.

  46. Min, my first pay was $15:60 a week. I was absolutely over the moon to see it go up to $16:15 after the first week.

    Funny thing though, I still had money left over at the end of each week.

    In my first holiday pay there were 4 $20 notes. I stared at them for hours – I’d never seen so much money in my life.

  47. Min, did you know an old couple, now deceased, by the name Olney? Not so old then, died last year in their 80’s.

  48. Miglo – ‘Thanks to my first wife I’ll be working until I’m 75.’

    That seems fair. When do you intend to start?

  49. Was this in Mt Evelyn James? We first lived in Old Gippsland Road then moved to Fernhill Road. I was a Shire Councillor for the Shire of Lilydale representing the East Riding [Mt Evelyn, Wandin, Seville etc] in the early 80’s and so I did get to meet a lot of people of course, however the name doesn’t ring a bell. We’ve been living in NSW for the past 17 years. I occasionally hear from the old crew such as Len Cox who is now Mayor of Yarra Ranges Shire (since the amalgamation). In my day Len used to represent the West Riding. A good system the riding system with 1 councillor of 3 per riding coming up for election each year.

  50. Quick note for Daphon..the movie Copying Beethoven is worth a look.

  51. Arch and Geoff, were like another set of grandparents. Geoff was some sort of computer technician, Arch, the traditional homemaker. Had a son in New Guinea and a daughter in Kempsey. Retired to Ocean Grove. A lovely couple, I knew them through yacht racing. Not sure exactly where they lived, just that it was Mount Evelyn and in those days, it was way out in the country for a little tacker like me.

  52. Tom, that was funny. So unlike you.

    Someone else wrote it for you, didn’t they?

  53. James, it certainly was the country. Mt Evelyn was one of the places for cheap housing in the 70’s. Friends of ours lived off Quinn Crescent and it was follow the bulldozer down the road and there is your block of land.

  54. Did I mention that the idea of union officials talking about “work” is an oxymoron?

    And incidentally, I was out tonight supporting our vital hospitality industry, and showing solidarity with our international brothers in the struggle for a good vintage champagne, we discussed the need for an increase in the retirement age in the industry of our mutual interest.

    It postpones the need for training of the next generation of vignerons.

  55. Changing the Government pension age is one thing but changing the Superannuation access age is not going to happen because it would be political suicide.

    As Paul Keating has stated……..if you raise the Superannuation access age to 67 as well then access to one’s compulsory super becomes soooooooooooo distant for some that it will be looked upon as merely a government impost and salary sacrificing or any additional contributions will be viewed as just good for the estate you leave the kids but just plain crazy for the individual.

    People will stop voluntary contributions and dive back into negative gearing probably for property investment purposes.

    So if they tried raising Superannuation access to 67 I reckon we would have protests in the streets rivaling those of the 1975 constitutional crisis and I would not doubt that Labor would be decimated in a landslide.

  56. I agree, IATW, but who has suggested changing it from 55? (and the first $140,000 is tax free 😀 ) – always amuses me, ’cause its YOUR ‘friggin money!

    Although self-discipline is a limited skill in most societies these days…role modelling from the top down I suppose…

  57. IATW, I agree. I’ve been retired for nearly a decade (just the occassional consultancy) but if the 67 age was in force I would still be working.

    Having said that, the current arrangements, particularly the non-taxing of super incomes seems unsustainable, particularly when familiy trusts enter the mix.

  58. TB,

    Who made the recommendation you asked ?

    The Henry Tax Inquiry is believed to be including it in its key recommendations.

    Now it’s just not going to happen as it would be total economic lunacy ( it destroys the incentive to save by salary sacrificing) not to mention absolute political poison/suicide.

    No government could possibly get it through Parliament as it would be so divisive that it would split the ALP asunder as there would be so many members willing to vote against it especially those with the right demographics in their respective seats. The government would fall on such a Bill.

    Not that it would make any difference but the People would demand changes to politicians super at the same time to bring it into alignment.

    That’s right…………………..it aint gunna happen.

    I’d rather have John Howard back in power than see something like this get through.

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