CANBERRA, Australia — 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 deficit forecast to reach $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.

The ratio of working-age Australians to those over 65 in the world’s 12th-largest economy is expected to decline to 3:1 by 2050 from 5:1 in 2010. In Japan it’s already below 3:1 and in Germany it’s close to that level, according to the International Labor Organization.

“While Australia is the first to raise the age to 70, it won’t be the last,” said Steve Shepherd of international employment agency Randstad Group in Melbourne. “The world will be watching this.”


Australia’s 2.4 million state-retirement-age pensioners draw about $37.6 billion a year, making it the largest government spending program. That’s forecast to rise 6.2 percent a year over the next decade, according to an independent review commissioned by Prime Minister Tony Abbott. The program provides the main source of income for 65 percent of retired Australians.

“We should celebrate the fact that Australians are living longer, but we must prepare for adjustments in our society,” Hockey said in his May 13 budget speech. Under his plan, Australians born in 1966 or after will have to work until they are 70, from 65 now, before they can draw their government retirement allowance.

That isn’t popular with voters. A Galaxy poll conducted last month found that 69 percent of voters polled disagree with the plan to unlock pensions five years later by 2035.

Failure to rein in the program would put a greater onus on younger workers to fund it through increased contributions and taxes. Raising the pension age may also mean more competition for those just starting in the workforce. Unemployment among those ages 15-24 reached a 12-year high of 13.1 percent in May, more than double the national average of 5.8 percent.


Yasmin Keany, 23, moved to Melbourne from Canberra four years ago hoping to start a career in arts conservation. An attempt to work as a picture framer ended when the manager said he was looking for someone with more experience.

“I know a lot of people in their 30s who are still trying to break into the industry but have been forced to work in hospitality,” said Keany, who is now unemployed, after working as a part-time cook. “If there are a lot more old people looking for jobs, it’s only going to get worse.”

The decision to increase the retirement age is only going to exacerbate unemployment among the young, said Chris Riley, chief executive of Youth Off the Streets, a Sydney-based organization that provides accommodation and counseling.

“We’re willfully creating a jobless generation,” he said. Many older workers require additional training anyway, especially those like Chatterton, who might have to switch to less physically demanding work.

“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, male life expectancy was 55.2 years. Now it’s 80.6 years, with women expected to live an extra four years.

“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.”

Retirement ages are creeping up elsewhere too. Germany and Britain 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 full Social Security benefits 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.

“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.”

Abbott’s government will have to get the legislation through parliament, which will require amending a 2009 law from the previous Labor government that increases the qualifying age to 67 starting in 2023.

The bill will have to get through the upper house, where the balance of power will be held by a grouping of small, independent parties. The opposition Labor party has signaled it will vote against the proposals.

The prime minister’s “only plan is for Australians to work longer and harder and retire later, with less,” opposition leader Bill Shorten said in a May 15 speech to parliament.

Veronica Sheen, a Melbourne-based researcher, said raising the pension age is unnecessary and many employers will balk at hiring workers in their late 60s.

“We’ll have enough problems in getting people to work until they’re 67,” said Sheen, who has directed a federal government program for older, unemployed workers. “Middle-aged people don’t necessarily do well out of changes in the way the workforce operates. In the future, technology substitution and automation will play a bigger role.”

Joan Chapple had that experience losing her job in 2006, when she was 55. She spent three years unemployed and her morale plummeted when one company told her it wasn’t looking for “old people.”

“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?”