Too many Indigenous Australians die before getting to claim the age pension. We need to make retirement fairer

If you’re a non-Indigenous Australian, when you hit the age of 67^[1], you’ll typically have another 15 years of long, hopefully happy retirement to look forward to.

But as we’ve seen too often with our own family and friends, many Indigenous peoples don’t make it to retirement age. The median age at death for Indigenous people in Australia is still 63 years old^[2].

That, along with average life expectancy, is better than it used to be. But it remains almost two decades short of non-Indigenous Australians’ median age at death, 82 years old.

63 is not old enough to get the age pension^[3]. And it’s barely over the age of access to superannuation savings, which is 60.

Yet Indigenous Australians are eligible for aged care support from the age of 50^[4] – precisely because of well-known differences in life expectancy^[5] and health outcomes^[6].

So why doesn’t that apply to the age pension and superannuation too?

Our new research^[7], published today in the Australian Journal of Social Issues^[8], looks at how earlier access to the age pension and superannuation could stop so many people missing out on a chance to retire with dignity.

Access to retirement funds has changed for the better

Our research highlights how Australia’s retirement system has slowly changed over the past four generations, mostly for the better.

Before the second world war, the retirement system was “largely confined^[9] to male white-collar public servants” working full-time. Over time, that’s changed. We’ve seen universal superannuation introduced in 1992. Changes to pay low-income workers earning under $450. Changes for women and super for paid parental leave.

Today the superannuation guarantee is gradually increasing, with all employees entitled to 12% from their employer^[10].

Now, 17 million Australians^[11] have super accounts, worth a total of A$4.1 trillion^[12].

But when it comes to who gets to enjoy their retirement, it’s still not a system designed for everyone.

Built-in barriers for Indigenous retirees

For decades, we’ve known about problems with access to super^[13] and the age pension^[14] for Indigenous Australians.

Many of the barriers identified in 2018 banking royal commission^[15] persist today^[16] for Indigenous Australians when trying to access their superannuation.

These barriers include difficulties locating super (including super held by the Australian Tax Office), not being treated with respect when dealing with super funds and challenges accessing super funds after the death of a loved one.

Even for Indigenous Australians who do reach retirement age, their retirement savings are far lower^[17].

That’s due to many reasons, including lower workforce participation and incomes from being employed on schemes such as the Community Development Program^[18], which have not paid super^[19] for decades.

Those savings have often also been affected by stolen wages^[20], resulting in far less intergenerational wealth^[21] to pass on.

Why the age pension needs to be more flexible

To be eligible for the age pension, you must be 67 years of age and meet other eligibility requirements^[22].

That minimum age of 67 needs to be more flexible, otherwise our pension system is far more generous to some people than others.

Even based on average life expectancy rates (which have a smaller age gap than the median age at death), an average non-Indigenous Australian man^[23] would receive the age pension for about 8 years and 8 months longer than Indigenous men^[24].

For Indigenous women^[25], the difference in average life expectancy rate is only slightly smaller than men’s, at 8.1 years.

That’s not just lost time with loved ones. It’s also lost pension, which is worth a maximum of $29,874 a year for a single person.

How earlier super access could help

You must be 60 years old to access your superannuation (unless you were born before July 1964). There are rules about who can access superannuation early^[26], including compassionate grounds, terminal illness and severe financial hardship.

We propose early access to both the age pension and superannuation as an option for Indigenous Australians and anyone with a chronic health condition that impacts life expectancy rates.

This isn’t unprecedented; granting early access to superannuation was allowed when COVID hit.

We saw then how flexible the super system could be, with $37.8 billion released^[27] in super savings between April and December 2020.

There is an opportunity now for the federal government, superannuation industry and Indigenous Australians to work together to make real change.

Australia’s retirement income systems could move from being one-size-fits-all to economically just systems that finally work for all of us.

References

1. ^{^} of 67 (theconversation.com)
2. ^{^} 63 years old (www.abs.gov.au)
3. ^{^} the age pension (www.servicesaustralia.gov.au)
4. ^{^} from the age of 50 (www.health.gov.au)
5. ^{^} life expectancy (www.abs.gov.au)
6. ^{^} health outcomes (www.aihw.gov.au)
7. ^{^} new research (doi.org)
8. ^{^} Australian Journal of Social Issues (onlinelibrary.wiley.com)
9. ^{^} largely confined (doi.org)
10. ^{^} 12% from their employer (www.superguide.com.au)
11. ^{^} 17 million Australians (superannuation.asn.au)
12. ^{^} A$4.1 trillion (www.apra.gov.au)
13. ^{^} access to super (superconsumers.com.au)
14. ^{^} age pension (www.hrlc.org.au)
15. ^{^} 2018 banking royal commission (www.superannuation.asn.au)
16. ^{^} persist today (superconsumers.com.au)
17. ^{^} far lower (theconversation.com)
18. ^{^} Community Development Program (www.niaa.gov.au)
19. ^{^} not paid super (oia.pmc.gov.au)
20. ^{^} stolen wages (theconversation.com)
21. ^{^} intergenerational wealth (research-repository.griffith.edu.au)
22. ^{^} eligibility requirements (www.dss.gov.au)
23. ^{^} average non-Indigenous Australian man (www.abs.gov.au)
24. ^{^} longer than Indigenous men (www.abs.gov.au)
25. ^{^} Indigenous women (www.abs.gov.au)
26. ^{^} superannuation early (www.ato.gov.au)
27. ^{^} $37.8 billion released (www.ato.gov.au)