Time to end the idea of full-time retirement: FSC

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Discrimination towards older workers is on the decrease and older people are more willing to stay in the workforce for longer, according to a research report from the Financial Services Council.

The report (conducted by Kraeb and Gavin Anderson) How Older Workers are Valued, has revealed surprising trends and attitudes towards Australia’s older workers.

The results are timely in respect of the current hot discussion taking place about retirement age, which Treasurer Joe Hockey has indicated could be one of the casualties in his effort to trim, cut or scrap unsustainable expenditure.

The FSC research shows that an increase in the age of retirement may not have as terrible an effect as some are predicting because many older workers want to stay in the workforce anyway.

This decision is being made regardless of their financial situation, said FSC CEO John Brogden.

“By 2050 there will be 2.7 working Australians for every citizen over 65,” he said. “We need to end the concept of full-time retirement. Australian’s remaining in the workforce for longer periods will stretch retirement incomes by supplementing superannuation through part-time work as well as reduce our nation’s skill shortage.”

The retirement savings of Australian’s would be increased by $200 billion for every year the government increases the preservation age to keep people in work, and lifting the age to at least 65 would improve public finances, said Brogden.

The FSC asserts that the age pension and preservation age should ultimately be linked to life expectancy.

And the research has revealed that age discrimination within the workplace is also a dying concept, indicating that the labour market is adjusting and starting to embrace the skills and experience of older workers.

“Two years ago, 28% of employees between 50 and 75 said they were discriminated against on the grounds of age. This has reduced to 18%,” Brogden said. “This is a critical precursor to increasing the retirement age and boosting productivity.”

Training and upskilling for older workers is on the increase too, with 67% saying that they have been offered further training opportunities compared with 39% in 2012. The majority of these older workers – 89% - took up the training and upskilling on offer.

And although a number of financial organisations have voiced their support of the rumoured changes to retirement in Australia, there have been other groups who say it’s not a magic bullet.

Independent public policy think tank The Australia Institute last week published a research paper that supported slashing superannuation tax concessions and changing to a universal aged pension.

It said that the tax concessions, most of which are being claimed by people able to afford early retirements if they choose, need the most urgent attention as they will soon cost more than the entire age pension.

The paper said the age pension currently costs $39 billion and superannuation tax concessions will cost the budget around $35 billion in 2013-14.

These concessions are the projected to rise to $50.7 billion in 2016-17, an increase of around 12% a year. By this time superannuation tax concessions will be the single largest area of government expenditure, the report stated.

Abolishing tax concessions and changing to a universal (no means tested) aged pension would result in 30% less spending, The Australia Institute claims. 


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