Age Pension Changes Looming

Financial advisers should be mindful of important changes to the Age Pension effective July 1.

The qualifying age will progressively increase by six months every two years, and by 1 July 2023, will reach 67-years-old for those born on or after 1 January 1957, according to the Department of Social Services.

No changes will apply for those born before 1 July 1952; and qualification age remains at 65. Recipients of Veterans' Affairs payments also will not be affected.

Advisers should be mindful that the changes will not affect the value of the pension, the DSS warned.

"The age at which people can access their superannuation does not change. That remains between 55 and 60, depending on when you were born."

It estimates in the next 40 years, the number of people aged 65 and over will more than double to 8.9 million people. Currently, there are 4.5 people of working age for every pensioner aged 65 and over. This ratio will drop to 2.7 workers by 2055.

"As we live healthier and longer lives, we can stay in work longer, to contribute to the economy, and boost our savings and superannuation balances, for a more comfortable retirement," DSS said.

The average life expectancy for Australians was 57-years-old in 1909 when the Age Pension was introduced, compared to today's estimate of 83-years-old.

Karren Vergara Financial Standard 16 June 2017

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