By Millie Muroi
Raising the pension age has kept more women in the workforce for longer, but a study reveals that it may have contributed to Australia’s plunging fertility rates because their daughters know there’s no retired grandmother to help care for the children.
Economist Pelin Akyol from e61 said raising the age pension eligibility threshold from 60 to 67 between 1995 and 2023 in Australia had reduced the country’s birth rate by tying more older women up in work.
Women are less likely to have children if their mothers have not reached pension age, a study shows.Credit: Getty Images
“This may be because women are more likely to have children when their mothers are available to help them with childcare,” she said.
In 2023, Australia’s fertility rate hit a historic low of 1.5 births per woman, down from 1.6 the year before and short of the 2.1 required to maintain a stable population without migration.
Akyol, who examined Household Income and Labour Dynamics Australia survey data from 2001 to 2022, said 69 per cent of women whose mothers were not yet eligible for the pension had children, while 73.5 per cent of those with mothers who were old enough to get the pension were already mothers themselves.
The women whose mothers were not old enough to retire had fewer children on average (1.47) than those with older, retired mothers (1.56).
The research found that only one in four grandmothers was still working when they qualified for the pension, compared to more than a third of grandmothers who had not reached pension age.
While the government has pledged to give families three days a week of subsidised childcare regardless of circumstances, Akyol said the high cost of formal childcare in Australia meant the availability of family members to babysit was still important.
“We find that grandmothers’ pension eligibility has a large impact on fertility, similar to the impact of the introduction of paid parental leave, which increased the average number of births by 5 per cent,” she said.
“Grandmothers are a vital source of informal childcare support for many families.” Grandmothers’ availability for babysitting played a bigger role in fertility for women with lower educational attainment or in lower-wealth households, Akyol said.
But what of grandfathers? The research found raising the pension age made little difference to their children’s plans to start families. Grandmothers still do the vast majority of informal childcare.
Akyol said while policies such as raising the pension age were aimed at improving workforce participation and reining in the cost of the age pension, it was important to design policies that balanced the needs of an ageing population with support for young families. The age pension, the single largest federal budget expense, is forecast to top $61 billion in the coming financial year.
“These findings suggest pension reforms that increase the eligibility age can have unintended intergenerational consequences on fertility,” she said. “We shouldn’t necessarily reduce the age eligibility for the pension, but maybe we can think about how we can compensate for this lost childcare support.”
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