Longevity a challenge for new Govt

The increasing longevity of Australians poses a challenge for the newly-elected Rudd Labor Government in terms of determining an appropriate retirement age, according to Mercer.

The warning came as Mercer released new data revealing that Australia is not the only country wanting people to work longer and take retirement later.

Mercer analysed changes in normal retirement age across 47 countries and found that the twin pressures of increasing social security costs and lower mortality rates were driving changes in retirement provision.

“An increase in state retirement ages is only part of the response,” Mercer global head of international retirement service Giles Archibald said. “In the private sector, companies are moving away from defined benefit towards defined contribution and hybrid plans to control costs and risks.”

He said this was in parallel with changes to governance and funding requirements.

“Governments are increasingly looking to the private sector to supplement social security, placing more pressure on employer resources,” Archibald said. “However, as social security is eroded, so innovative company-sponsored retirement plans are becoming a more attractive tool for companies to recruit the best talent and remain competitive.”

Mercer Asia Pacific retirement leader Tim Jenkins said the issue of increased longevity posed a challenge for the newly-elected Labor Government.

Mercer pointed out that its Australian-based worldwide partner David Knox had recently urged a lifting of the pension age in Australia from 65 to 67.