The Times Australia
The Times World News

.
The Times Real Estate

.

Australia's 'retirement age' just became 67. So why are the French so upset about working until 64?

  • Written by Peter Whiteford, Professor, Crawford School of Public Policy, Australian National University
Australia's 'retirement age' just became 67. So why are the French so upset about working until 64?

Since Saturday, Australians have been required to wait until the age of 67 until they can get the age pension.

The original so-called “retirement age” of 65 for men dated back to 1909[1].

Women had their pension age lifted from 60 to 65 between 1995 and 2013[2]. And all Australians have had it lifted in stages from July 2017, in a process that ended on July 1 2023[3].

It has happened with little protest – a stark contrast to the demonstrations and riots that rocked France earlier this year, when President Macron proposed and passed laws to lift the French pension age from 62 to 64.

What’s so special about French pensions?

French strikes and demonstrations over the retirement age aren’t new.

There were nationwide protests when France increased its retirement age from 60 to 62 in 2010[4], before that in 2003[5], and in 1995[6], when France tried to increase the pension age for public sector workers.

Just about anything you could want to know about public pension schemes in high-income countries can be found in the OECD[7] report Pensions at a Glance[8], published every two years, most recently in 2021.

Public pension spending in France[9] is 13.6% of GDP, compared to 4% in Australia[10].

In part, this is because France has an older population than Australia, but it is also because French pension payments are more generous than both Australia’s age pension and superannuation supports taken together.

The OECD finding that Australia provides a replacement rate of about 40% and France of about 74% is “forward looking”, in that it is based on what a worker on average earnings is estimated to be entitled to under the system applying in 2020, if she or he works from age 22 until that country’s normal retirement age.

For low-paid workers, Australia’s means-tested age pension makes the payments about as generous as those in France.

A separate 2018 OECD calculation showed that the average after-tax income of a French household headed by someone 65 years or older was 99.8%[11] of the average income of all French households.

In contrast, the average after-tax income of an Australian household headed by someone of that age was 75% of that of all households.

Given that French households receive about the same disposable income while retired as working, it is easy to see why they are keen to retire.

And the heavy tax contributions required to fund their retirement incomes give them little opportunity to save privately while working.

The level of median private wealth in Australia (converted at prevailing exchange rates) is nearly twice[12] that in France.

Read more: Pension reform in France: Macron and demonstrators resume epic tussle begun over 30 years ago[13]

Yet French public pension wealth is substantial. Calculating the value of the future pension income streams using life expectancies, the net pension wealth of French retirees amounts to 14 years of average earnings, compared to just over seven in Australia.

Because the value of these income streams is strongly influenced by how long the pensions are received, raising the French pension age by two years would cut the value of French pension wealth by around 8%.

Why was postponing pensions easier in Australia?

The phase-in of the Australian change after 2017 meant it didn’t affect the retirement incomes of Australian workers until many years after the change was first announced, and didn’t affect the incomes of those already retired at all.

And the Australian change legislated in 2009 was part of a broader program[14] of reforms that included the biggest single increase in age and disability pensions and carer payments[15] in Australian history.

Yet it will have losers. Those losing the most will be those with the shortest life expectancies. Indigenous men have life expectancies nearly nine[16] years lower than non-Indigenous men and Indigenous women nearly eight years lower.

Which Australians will pay the highest price?

And the change has pushed a substantial number of Australians aged 65 and over who would have once received the pension on to the much-lower[17] Jobseeker unemployment payment.

The number of people aged 65 years and over receiving JobSeeker climbed from zero in 2017 to 40,300[18] by May this year – and will climb further because of this month’s change.

Australians who once would have been on the pension are now on JobSeeker.

These people are severely disadvantaged by this change, as the level of payment for an older unemployed person is more than $300 a fortnight less than the age pension, a gap that will only be slightly reduced by the increases announced in the most recent Commonwealth budget.

Relatively little attention has been paid to these people, who because of the low level of payment are among the poorest in the Australian population – with very limited prospects of being able to improve their circumstances.

In contrast, the idea of boosting tax on the earnings of superannuation balances over A$3 million[19] attracted widespread criticism[20].

The very different institutional environments of Australia and France have created different lobby groups, with different interests to protect.

References

  1. ^ 1909 (treasury.gov.au)
  2. ^ 2013 (insidestory.org.au)
  3. ^ July 1 2023 (www.dss.gov.au)
  4. ^ 2010 (www.theguardian.com)
  5. ^ 2003 (www.etui.org)
  6. ^ 1995 (theconversation.com)
  7. ^ OECD (www.oecd.org)
  8. ^ Pensions at a Glance (www.oecd.org)
  9. ^ France (www.oecd.org)
  10. ^ Australia (www.oecd.org)
  11. ^ 99.8% (www.oecd.org)
  12. ^ twice (www.credit-suisse.com)
  13. ^ Pension reform in France: Macron and demonstrators resume epic tussle begun over 30 years ago (theconversation.com)
  14. ^ broader program (cdn.theconversation.com)
  15. ^ increase in age and disability pensions and carer payments (www.aph.gov.au)
  16. ^ nine (www.niaa.gov.au)
  17. ^ much-lower (theconversation.com)
  18. ^ 40,300 (www.data.gov.au)
  19. ^ A$3 million (www.theguardian.com)
  20. ^ widespread criticism (www.firstlinks.com.au)

Read more https://theconversation.com/australias-retirement-age-just-became-67-so-why-are-the-french-so-upset-about-working-until-64-208648

The Times Features

Understanding the Dangers of Ignoring a Gas Leak

Gas leaks are silent threats lurking within both homes and workplaces. A gas leak occurs when natural gas or any other gaseous substance escapes from a pipeline or containment. T...

Can You Sell Your House Privately in Queensland? Here’s How

Selling a house privately in Queensland is entirely possible and can be a cost-effective alternative to using a real estate agent. While agents provide valuable expertise, their co...

Itinerary to Maximize Your Two-Week Adventure in Vietnam and Cambodia

Two weeks may not seem like much, but it’s just the right time for travelers to explore the best of Vietnam and Cambodia. From the bustling streets of Hanoi to the magnificent te...

How to Protect Your Garden Trees from Wind Damage in Australia

In Australia's expansive landscape, garden trees hold noteworthy significance. They not only enhance the aesthetic appeal of our homes but also play an integral role in the local...

Brisbane Homeowners Warned: Non-Compliant Flexible Hoses Pose High Flood Risk

As a homeowner in Brisbane, when you think of the potential for flood damage to your home, you probably think of weather events. But you should know that there may be a tickin...

Argan Oil-Infused Moroccanoil Shampoo: Nourish and Revitalize Your Hair

Are you ready to transform your hair from dull and lifeless to vibrant and full of life? Look no further than the luxurious embrace of Argan Oil-Infused Moroccanoil Shampoo! In a...

Times Magazine

"Eternal Nurture" by Cara Barilla: A Timeless Collection of Wisdom and Healing

Renowned Sydney-born author and educator Cara Barilla has released her latest book, Eternal Nurture, a profound collection of inspirational quotes designed to support mindfulness, emotional healing, and personal growth. With a deep commitment to ...

How AI-Driven SEO Enhancements Can Improve Headless CMS Content Visibility

Whereas SEO (search engine optimization) is critical in the digital landscape for making connections to content, much of it is still done manually keyword research, metatags, final tweaks at publication requiring a human element that takes extensiv...

Crypto Expert John Fenga Reveals How Blockchain is Revolutionising Charity

One of the most persistent challenges in the charity sector is trust. Donors often wonder whether their contributions are being used effectively or if overhead costs consume a significant portion. Traditional fundraising methods can be opaque, with...

Navigating Parenting Arrangements in Australia: A Legal Guide for Parents

Understanding Parenting Arrangements in Australia. Child custody disputes are often one of the most emotionally charged aspects of separation or divorce. Parents naturally want what is best for their children, but the legal process of determining ...

Blocky Adventures: A Minecraft Movie Celebration for Your Wrist

The Minecraft movie is almost here—and it’s time to get excited! With the film set to hit theaters on April 4, 2025, fans have a brand-new reason to celebrate. To honor the upcoming blockbuster, watchfaces.co has released a special Minecraft-inspir...

The Ultimate Guide to Apple Watch Faces & Trending Wallpapers

In today’s digital world, personalization is everything. Your smartwatch isn’t just a timepiece—it’s an extension of your style. Thanks to innovative third-party developers, customizing your Apple Watch has reached new heights with stunning designs...

LayBy Shopping