Retirement
Regional Australia’s pension ‘crisis’ a ‘taste’ of what’s to come
Unless workforce participation is promoted among older generations, the high number of pension-dependent Australians in some regional areas is “just a taste” of what’s to come.
Regional Australia’s pension ‘crisis’ a ‘taste’ of what’s to come
Unless workforce participation is promoted among older generations, the high number of pension-dependent Australians in some regional areas is “just a taste” of what’s to come.
That’s according to the Regional Australia Institute (RAI), which in a dire warning said that if older Australians’ participation in the workforce isn’t encouraged and facilitated, annual age pension expenditure will “blow out” from $45 billion now to $51 billion by 2020.
As it stands, in some regional areas like Victor Harbor in South Australia, Port Macquarie-Hastings in NSW and East Gippsland in Victoria, more than 20 per cent of population is already reliant on the age pension.
“Australia’s oldest regions are experiencing a growing pension crisis… This is a taste of what is to come at a national level,” RAI said.
However, if a higher proportion of Australians between 55 and 64 years old in those regions can be engaged in the workforce, “a significant lift to local incomes, economic growth and a lower pension bill for the government should follow”.
According to the report, the “silver economy” possesses “some serious economic muscle” as well as high earning capacity.
Nevertheless, dialogue around this demographic has “long been associated with costs and dependence”, RAI said. However, they argued that this “anxiety” has been “misplaced”, pointing to figures from the Australian Bureau of Statistics which showed more Australians are planning on worker longer.
Since 2005, the percentage of Australians planning to work until 70 has grown from 8 per cent to 23 per cent.
Acknowledging that an ageing population does present “certain challenges”, RAI argued that as more Australians are expected to live longer, there are “substantial local benefits” for regional communities which keep their older workforce active.
“With the right strategies, regions can lift participation rates and boost spending power in local economies, even with an older age profile.
“Enabling greater workforce participation among older Australians will take a mix of policies that aim to empower older workers to stay in their jobs for longer, as well as making it easier for those out of work to take advantage of new opportunities.”
With greater earning capacity comes greater spending capacity, wealth and demand for services, RAI continued.
As such, improving workforce engagement among older workers is “an effective measure to offset many of the potentially negative impacts of an ageing population”.
“It reduces the dependency on those still active in the labour force and mitigates the fiscal costs of longer life expectancy,” RAI explained.
Further, once increased spending is factored in, regions like the NSW Central Coast would enjoy a boost of about $33 million each year with just a 3 per cent increase in workforce participation.
“A similar increase in the Hume and Loddon Mallee regions in Victoria could deliver $80 million in added consumer power.”
How can the ‘silver economy’ be activated?
However, in order for such workforce participation to occur, there needs to be increased employment opportunities for older workers, RAI added.
The institute elaborated: “Research has shown that mature age workers face a raft of barriers to entry or re-entry into the labour force. Age discrimination, technological change and less secure work is leaving a growing number of older workers without the skills that employers are after as well as limited opportunity to obtain them.
“These kinds of barriers need to be overcome and innovative approaches tested if regions are to take full advantage of an older workforce.”
RAI called for programs which boost worker skills and match relevant skills with local industry needs.
“It will also mean strengthening financial incentives to ensure that working beyond retirement remains an attractive option,” RAI said. “For example, changes to the Work Bonus Scheme and superannuation preservation age could be strengthened to reflect the desire many older Australians express to work beyond the traditional age of retirement.”
Further, RAI said employers have a role to play in promoting longer working lives. Pointing to the lack of flexible work arrangements as a trigger for workplace exits, RAI proposed more flexible workplace options as a way of extending an employee’s working life.
“The conversation around Australia’s ageing population has been dominated by gloomy talk of a health and aged care crisis. Only recently has the policy environment shifted towards a more comprehensive approach,” RAI concluded.
“This is vital, ageing is not a future risk, it’s here right now and Australia and its regions need to respond to the opportunities of longer and healthier lives.”
Retirement Planning
‘Surprising and disappointing’ lack of innovation in retirement products
Despite an ageing population, the “surprising and disappointing” lack of retirement product information is holding members back, an industry expert has revealed. ...Read more
Retirement Planning
Aged care funding falls short of ‘once-in-a-generation reform’
The “once-in-a-generation” reforms have fallen short of the measures required to fix the neglected sector, industry experts have said. ...Read more
Retirement Planning
Aged care increases announced, but are they enough?
The government has announced more than $17 billion in assistance to the underfunded aged care sector over five years. ...Read more
Retirement Planning
Majority of Australians worry about their retirement
The majority of Australians believe in raising the aged pension as well as lifting the rate of superannuation to 12 per cent as they worry about having enough in retirement, new research has revealed....Read more
Retirement Planning
1 in 2 Aussies feels unsure about their retirement
With the majority of Australians concerned about their financial future, a superannuation provider has shared six tips to help Australians take control of their retirement planning. ...Read more
Retirement Planning
5 tips for a financially healthy retirement
While it is never too early to start planning for your retirement, it is also never too late, with just five simple steps enough to make a big difference to your financial position and ensure you have...Read more
Retirement Planning
PM unveils $452m funding package following ‘harrowing review’
The federal government has announced that it will spend almost half a billion dollars on immediate measures to help overhaul the aged care sector following the release of the aged care royal commissio...Read more
Retirement Planning
Retirement time bomb requires complex thinking
The majority of Australia’s super assets now sit in the hands of retirees and pre-retirees, but many require more nuanced investment strategies to achieve the lifestyle they want in retirement, a ne...Read more
Are you being priced out of the market? Have you got the Tuesday blues? And are you ready for the upcoming super changes?
Listen now
Are property prices set to crash? Should you jump on board the fintok craze? And how to prepare for this tax time
Listen now
Dissecting the budget and what it means for your equities, property and super
Listen now
Has the property market reached its peak; Biden’s climate summit and our sharemarket, and the upcoming budget
Listen now
Retirement Planning
‘Surprising and disappointing’ lack of innovation in retirement products
Despite an ageing population, the “surprising and disappointing” lack of retirement product information is holding members back, an industry expert has revealed. ...Read more
Retirement Planning
Aged care funding falls short of ‘once-in-a-generation reform’
The “once-in-a-generation” reforms have fallen short of the measures required to fix the neglected sector, industry experts have said. ...Read more
Retirement Planning
Aged care increases announced, but are they enough?
The government has announced more than $17 billion in assistance to the underfunded aged care sector over five years. ...Read more
Retirement Planning
Majority of Australians worry about their retirement
The majority of Australians believe in raising the aged pension as well as lifting the rate of superannuation to 12 per cent as they worry about having enough in retirement, new research has revealed....Read more
Retirement Planning
1 in 2 Aussies feels unsure about their retirement
With the majority of Australians concerned about their financial future, a superannuation provider has shared six tips to help Australians take control of their retirement planning. ...Read more
Retirement Planning
5 tips for a financially healthy retirement
While it is never too early to start planning for your retirement, it is also never too late, with just five simple steps enough to make a big difference to your financial position and ensure you have...Read more
Retirement Planning
PM unveils $452m funding package following ‘harrowing review’
The federal government has announced that it will spend almost half a billion dollars on immediate measures to help overhaul the aged care sector following the release of the aged care royal commissio...Read more
Retirement Planning
Retirement time bomb requires complex thinking
The majority of Australia’s super assets now sit in the hands of retirees and pre-retirees, but many require more nuanced investment strategies to achieve the lifestyle they want in retirement, a ne...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
