You will probably work longer than your parents did. Here's why

The age at which you can get the age pension in Australia will be raised to 67 in July, but that could increase further unless the government can meet the financial requirements of the growing cohort of retirees.

The age at which an Australian can qualify for a state pension will increase from 66 and a half years to 67 years in July. Source: Getty

Key Points

• Australia's age pension age will increase to 67 in July.
• Plans to increase the retirement age in France have been met with strikes and protests.
• The director of the University of Western Australia Public Policy Institute said he wouldn't be surprised if Australia's pension age rose further in coming years.

Plans to increase the retirement age in France have been met with protests in the streets and worker strikes, which have impacted schools, transport and energy production.

But while a big portion of the French oppose raising the age at which people become eligible for the Aged pension to 64, this year Australia will raise this to 67.

So what is behind the shifting age of retirement and what does it mean for working Australians?

Has Australia’s pension age always been 65 years?

The Aged pension was first introduced in Australia in 1909 for anyone 65 years and above.

A year later, the government reduced the minimum age of eligibility for women to 60.

Plán francúzskej vlády zvýšiť minimálny vek odchodu do dôchodku zo 62 na 64 rokov do roku 2030 sa stretol s protestmi naprieč celou krajinou. Source: AAP / CHRISTOPHE PETIT TESSON/EPA

In the 1990s, the Keating government implemented changes that gradually brought the eligibility age for women in line with men by 2004.

More recently, the Liberal Party proposed to raise the age to 70 by 2035 - a plan unveiled at the 2014 federal budget.

While gradual increases to the Aged pension age by six months every two years began in 2017, plans to push eligibility past the age of 67 were abandoned. Then-prime minister Scott Morrison made the decision in 2018 not to implement increases beyond 67.

While you currently have to be 66 and a half years old to be eligible for the payment, this will change to 67 on 1 July 2023.

How does the Aged pension work?

The Aged pension is a social support payment provided to people in their later years who no longer work.

In Australia, in addition to the pension, the superannuation system is set up to invest money throughout people’s working lives, which can then be used for living costs later in life.

The two financial support systems co-exist, with a person's superannuation and assets influencing whether they can receive the aged pension and at what rate.

Australia’s Aged pension is funded through taxes paid by working Australians. With Australia’s population ageing, an increasing number of people are reaching pension age.

Professor Shamit Saggar, director of the University of Western Australia Public Policy Institute, said: “There’s a real risk that will be underfunded because the state pension is dependent upon how many pensioners we have at any one time, relative to the number of working Australians we've got.”

“To some extent, it’s a fixed envelope, you can only really expand it depending on the number of workers you've got. Having a later age of pension entitlement is a result of simply not having enough workers in the system to fund an ageing workforce – this is Australia’s challenge,” he said.

While some people choose to work into their late 60s and beyond in Australia, many have said they face age-based discrimination. Credit: FG Trade/Getty Images

Will Australia’s Aged pension age rise above 67?

While there is currently no commitment to further increases to Australia’s Aged pension age beyond July 2023, Professor Saggar said it could still happen in the coming years.

“I wouldn't be surprised if this government or a future government does look at trying to raise it beyond 67,” he said.

Although Professor Saggar also pointed out there were other factors within the economy that could be tweaked to increase the tax revenue to fund the Aged pension, including expanding the workforce through migration and effective childcare policies that would allow more women to work more hours.

“Migration tends to have a much younger age profile and migrants are typically more economically active than native-born Aussies,” he said.

“Therefore it is one useful way of expanding your working-age population.”

A reduced birth rate is also affecting the ability to fund state pensions, with Australia’s birth rate currently the lowest in more than a decade.

Professor Saggar said targeted government policies could open up opportunities for more people to play a greater part in the workforce.

“If you have effective childcare policies you find that, at the margin, many more women are brought into the workforce,” he said.

“There's lots of things that can be done so you squeeze more working hours and working days and working years out of the existing population by making work more worker-friendly.”

Protesting change in France

French trade unions want President Emmanuel Macron’s government to back down on its plan for pension reform which would see the retirement age increase by two years.

While Mr Macron has said the changes are “just and responsible" and needed to help keep government finances on a sound footing, unions have said raising the retirement age “only benefits employers and the wealthy”.

Pushing back the retirement age by two years and extending the pay-in period would bring an extra 17.7 billion euros ($27.7 billion) in annual pension contributions, allowing the system to break even by 2027, according to French Labour Ministry estimates.

Unions argue there are other ways to finance pensions, such as taxing the super-rich or increasing employers' contributions or those of well-off pensioners.

Professor Saggar said Mr Macron was experiencing significant backlash “to what you might want to call pro-business or pro-market policies.”

“There's an anti-very wealthy agenda that's taking place in France,” he said.

"Macron stated that French companies should not put their hands in their pockets any more than they had previously done.

"That's probably a mistake, because it is applying his pro-business agenda to something that affects everyone.

"That's allowed his critics to say that he is only interested in funding the state pension deficit in a particular sort of way," Professor Saggar said.

Opinion polls show most French people oppose the increase to the country's retirement age.

Train drivers, teachers and refinery workers were among those who walked off their jobs in protest of the move, as well as workers at a state-run nuclear power producer. More than one million protesters took to the streets in protests across France.

A previous version of this article referred to Australia's retirement age being 67, this has been corrected to Aged pension age.