Calls to lift pension age from 65 to 67

THE pension age should be lifted from 65 to 67 to encourage older Australians to stay in the workforce for longer, the Federal Government has been told.

Nest egg ... Canberra is being urged to lift the pension age to 67 to encourage older Australians to stay in the workforce.

'Keep working until you're 67'

THE pension age should be lifted from 65 to 67 to encourage older Australians to stay in the workforce for longer, the Federal Government has been told.

In its submission to the Harmer pension review, the international investment and financial consultancy firm Mercer added its voice to calls for a gradual increase in Australia's pension age, starting in 2025.

Mercer's Rob Knox said 65 was no longer an appropriate retirement age for many Australians.

"The (pension) age of 65 was set 100 years ago when the pension was introduced in 1908,'' he said.

"Clearly we are all living a lot longer now than we were back in 1908 and we're healthier.''

Mr Knox said older Australians who remained in the workforce would be healthier and better off financially, while the cost burden on taxpayers of paying pensions for an ageing population would be reduced.

The economic think tank, the Committee for the Economic Development of Australia, has previously proposed lifting the pension age to 67 or 68 to save $800 million a year in pension payments.

The US, the UK, Germany and Denmark have already announced moves to raise their pension age to 67 or 68.

National Seniors chief executive Michael O'Neill yesterday welcomed renewed debate on lifting Australia's pension rate in the medium-term, saying it was an "important'' issue for the nation's future.

Citing the Federal Government's 2007 Intergenerational Report, Mr O'Neill said there were now an estimated five working-age people for every person aged 65 or over but that would shrink to 2.4 by 2047.

"So unless we provide some incentive and encouragement for people to work that bit longer if they are able to, then you are going to run into difficulties,'' he said.

The idea also has the backing of pensioner Keith Jenkin.

"I should imagine that 67 would be okay, if your health is up to scratch,'' he said.

Other issues before the Harmer review include increasing the base pension rate, lifting the singles pension to two-thirds of the couples rate, allowing seniors to earn more before their pension is cut and boosting their rent allowance.

Mr Jenkin, 70, described the existing rent allowance of $55.10 a week for a single pensioner and $51.70 for a couple as grossly inadequate.

He said that after his wife retired next month, they would have only their pensions to live on and would have to leave their current home, where the rent had risen to $320 a week in the past year.

They plan to move to Toowoomba to seek a cheaper rental despite knowing no one there.