Australia plan to raise retirement age to 70
AUSTRALIANS would be forced to work until they turn 70, under a radical late-retirement plan from the government's top policy agency.
Pensioners would also have to hand the taxman a slice of the family home to help pay for aged care.
The Productivity Commission will today propose lifting the pension age from 65 to 70, to save taxpayers $150 billion in welfare and health spending as the baby boom generation hits retirement.
It warns that many Australians cannot afford to spend 35 years in retirement, and argues that elderly people are "neither infirm nor inept'' to keep working.
The PC calculates that taxes would need to rise 21 per cent to pay for the extra health and aged care costs of a population that will have more 100-year-olds than babies by the turn of the century.
Children born today will live well into their 90s, it says, and the number of Australians older than 75 will increase by 4 million - roughly the population of Sydney or Melbourne - over the next 50 years.
However the most provocative suggestion contained in the report is to raise the retirement age to 70 - saving taxpayers $78,000 in pension payments to every retiree.
The pension age is already on track to increase to 67 years by 2023, while the "preservation age'' for accessing superannuation will jump from 55 to 60 years by 2024.
Taxpayers spent $36 billion last financial year on pensions for the nation's 2.4 million retirees, who receive $376 a week for singles or $567 a week for couples.
Two out of three Australians aged 65 or older rely on the aged pension.
The report says the GFC wiped out a third of Australians' superannuation savings - pushing more people onto the old age pension.
It also reveals that generation Y stands to inherit a massive $400 billion worth of housing over the next 15 years - even though one in three baby boomers will leave nothing to the kids.
A third of baby boomers expect to spend all their money and assets before they die.
The report also proposes tapping into pensioners' greatest asset - the family home - by making them hand the government half the yearly increase in their home's value.
A pensioner with a home worth $500,000, for example, could expect to see its value rise by $10,000 a year.
Once a pensioner needed assistance at home - or if their partner had to enter an aged care home - then half that capital gain, or $5000 a year, would be earmarked for the government.
The money would be paid to the government once the house was sold.
"Having individuals contribute even half the annual real increase in their home values towards aged care services could reduce government expenditures by around 30 per cent,'' the report says.
"An equity release scheme of this kind would still leave older households with an appreciating asset base and provide a means to increase the quality of services provided over the long term.''
The report says Australia will have to spend an extra 6 per cent of national income to support an ageing population over the next 50 years.
It warns that governments will need to raise taxes or cut other spending to pay the bills.
