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?

Just in case you had any doubt, your Super’s Rooted!

This just in from Ross Gittins:

Super fund returns have been bad lately, right? Wrong. They have been fabulous – so good, in fact, that they are actually an illusion.

Australia’s super fund managers are the Wizards of Oz, quaking behind a curtain of unlisted asset valuations and waiting for Dorothy to pull the curtain aside and expose their pitiful reality.

In fact super performances could be worse this year than the sharemarket, which is the reverse of what happened in 2008 when super funds on average outperformed the sharemarket by more than 50 per cent.

If the sharemarket is steady this year or even goes up, and published super fund returns fall heavily – which is entirely possible, even likely – it will be an absolute disaster for the industry … and the government.

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