Keeping Australia's older workers in the labour force. A policy perspective

Australian Journal of Social Issues, Winter, 2008 by Maggie Walter, Natalie Jackson, Bruce Felmingham

There are a number of possible explanations for this lack of impact. First, is the relatively low level of the bonus. The one year payment of $1283.30 is unlikely to financially tempt those eligible to forgo both the leisure of retirement and their Age Pension entitlement. Those currently applying may be mostly those intending to keep working regardless. Second, the complexity of the PBS with its mandatory registration, its relatively inflexible work requirements, its requirement that claimants be Age Pension eligible and the lack of payment until the Age Pensions is claimed may limit its appeal. Third, as evidenced by these results, there appears to be a widespread lack of general awareness of the scheme's existence among older workers per se. However, given that only just over one quarter of these older workers expect a government pension to be their major source of retirement income (not shown here), it is likely that limited eligibility reduces the interest, and therefore awareness, of current older workers.

Superannuation Changes: The Transition to Retirement Measure

From July 1 2005 new superannuation access rules were implemented for those making the transition to retirement. These revolve around a 'preservation age' that is based on their birthday (e.g. for those born before July 1 1960, the age is 55). In essence, once an employee reaches preservation age they can reduce their working hours while still maintaining their income by accessing superannuation benefits through an 'income stream'. According to the Australian Tax Office (2006) no limits are made on the amount of superannuation benefits accessible under these measures but funds cannot be withdrawn as a lump sum, and individual funds may have their own limits.

To-assess workers' knowledge on this change, ASRAM respondents were initially asked how aware they were of the measure. As shown in Table 2, nearly half are aware or very aware of the option. This is a higher rate than of the PBS but still relatively low given the importance of such changes for older workers. A follow-up question for those respondents aware of the measure asked: At this stage of your working life, how likely, or unlikely, do you think it is that you would take up this option? Although 16 such respondents indicated that they are already using the provision, the majority think their later of use of the option unlikely.

The responses exhibited somewhat contrary differences by age. While awareness is significantly higher among workers in the older age groups, their likelihood of use is significantly lower. Only 29 percent of those aged 50-54 think they would make use of this option, in comparison with 38 percent of those aged 40-44. This result indicates that those with the greatest capacity to access the option by virtue of their nearness to the qualifying age are also the least likely to find it attractive and/or viable. Perhaps a more realistic understanding of one's superannuation financial situation, and/or capacity to reduce employment, reduces the temptation to decrease workforce participation level and/or begin accessing the superannuation nest egg.