Report: Lifting pension age to 70 could save $12b annually

A CALL to lift the pension age to 70 has received more support, with a Grattan Institute report showing it could save the federal budget as much as $12 billion a year.

In a report out on Monday, the Institute backs a range of measures which could, in total, save up to $37 billion for the Commonwealth.

Measures include changing superannuation contributions, fuel excises and raising taxes as well as changes to education, defence and health spending.

While institute chief executive John Daley wrote some proposals might be considered "crazy-brave", there was a need for urgent "budget repair" work to ensure the Federal Government's finances remained sustainable.

The proposal to raise the aged pension level comes after a similar "suggestion" from the Productivity Commission last week.

While the Federal Government ruled out another rise to the retirement age, above the coming level of 67 years old, the calls are gaining in strength.

Mr Daley wrote increasing the age of access to the pension was one of the most "economically attractive" choices to improve the budget bottom line.

"It could ultimately improve the budget bottom line by $12 billion a year in today's terms, while producing a lift in economic activity of up to 2% of GDP," he wrote.

"The principal adverse social consequence is that some who would prefer to stop working earlier will not be able to afford to do so."

The Productivity Commission also suggested raising the retirement age to 70, or even indexing it to rise along with Australia's life expectancy, which is among the world's longest.

Mr Daley also wrote that given the rising life expectancy, it was a "reasonable burden" that people were choosing to work for longer.

"There is a noticeable increase in the number of people who retire once they can withdraw super tax free, and another jump once they become eligible for the age pension," he wrote.


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