Aging Australians Balk at World’s Oldest Retirement Age.

http://www.bloomberg.com/news/2014-06-24/aging-australians-balk-at-world-s-oldest-retirement-age.html

Australian Treasurer Joe Hockey wants to raise the nation’s retirement age to 70, the highest in the world, to prevent an aging population from draining state coffers. Miner Noel Chatterton laughs at the idea.

“Good luck with that,” said the driller, who at 48 will be among the vanguard of workers who would be affected by the proposed change. “My hands are already about stuffed. The way my body is, I’ll be lucky to be able to work until I’m 60, let alone 70.”

Hockey is part of the Liberal-National coalition that won power in September pledging to end what he called the nation’s “Age of Entitlement” and repair a budget deficitforecast to reach A$49.9 billion ($47 billion) this fiscal year.Australia is leading the charge for a group of advanced economies from Japan to Germany that are pushing up the retirement age to head off a gray time bomb caused by a growing army of pensioners and a declining pool of taxpayers.

Longevity Price

Australia’s 2.4 million state-retirement-age pensioners draw about A$40 billion a year, making it the largest government spending program. 

Too Old

“What’s the point of training up kids if there are no jobs for them?” Chatterton said from his home in the rural community of Lower Barrington, in north-west Tasmania state. “This talk about retraining older workers is rubbish. Who’ll want to train me at 65 when I’m too old to work in the mines?”

When the nation introduced the retirement pension in 1909 for men of ages 65 and over, malelife expectancy was 55.2 years. Now it’s 80.6 years, with women expected to live an extra four years. Retired workers receive as much as A$383 a week from the government depending on marital status, income and assets, which Hockey says has placed unsustainable pressures on the budget.

“It can’t keep going the way it is,” said Melbourne-based demographer Bernard Salt of KPMG, a global provider of tax and audit services. “When the system was introduced, most Australians were expected to drop dead before they could claim the pension.”

Rising Limit

Retirement ages are creeping up elsewhere too. Germany and the U.K. both plan to raise the age to 67 from 65. The average pension age in the 34 nations that are members of the Organization for Economic Co-operation and Development is 65 years for men and 63.5 for women. In the U.S., the eligible age to collect Social Security is rising to 67.

South Korea and Turkey tie for having the lowest official retirement ages for men at 60, according to the OECD. Retirement ages for women are lower in some countries.

While workers with tough jobs, like Chatterton, may have to retrain to keep employed, they are in the minority. About 85 percent of Australia’s workforce is in the service industry, where most of the jobs aren’t physically demanding, KPMG’s Salt said, adding the government may have to introduce a system of medical tests to ascertain whether some blue-collar employees should retire before 70.

The longer years at work can help boost the economy, said Saul Eslake, Bank of America Merrill Lynch’s Melbourne-based chief economist for Australia.

Less Tax

“The notion that there is only a fixed amount of work to be done and if someone stays in the workforce for longer there will be less for someone else doesn’t ring true,” said Eslake, 56. “If people are working longer, they will be earning and spending more, which creates more jobs.”

“Not everyone wants to or can work for that long,” said Chapple, who is now 63 and looking forward to retiring in two years from her job as an executive assistant for a government infrastructure department. “What’s stopping the politicians from later changing the age to 75? How far can they go?”

An elderly couple walk down the street in Melbourne. When the nation introduced the retirement pension in 1909 for men of ages 65 and over, their life expectancy was 55.2 years. Now it’s 80.6 years, with women expected to live an extra four years.

An employee serves a customer at a deli counter inside a Coles supermarket in Sydney. About 85 percent of Australia’s workforce is the service industry.