The report, released yesterday by Treasurer Joe Hockey, projected that the number of Australians aged 65 and over will double by 2055 from the number today.
Male life expectancy is projected to increase from 91.5 today to 95.1 in 2055, while female life expectancy will increase from 93.6 today to 96.6 in 40 years’ time, according to the IGR.
The number of people aged 100 or older is projected to hit 40,000 by 2055 – compared to the 122 Australian centenarians alive today.
Commenting on the report, Financial Services Council chief executive Sally Loane said it was time to “face the reality” that Australians are living longer and will need to work longer to achieve a comfortable retirement.
“By 2055, there will be [only] 2.7 working Australians for every Australian over 65 compared with [the] 4.5 at present,” Ms Loane said.
“Seventy per cent of retirees currently receive a pension. This level of social welfare cannot be sustained."
Ms Loane reiterated calls she made in her recent maiden speech as chief executive of the FSC for a rethink about the relationship between superannuation and the age pension.
“The expectation should be that super is a replacement for the pension, not a top-up, and the age pension needs to be considered as a safety net for those who cannot provide for their own retirement,” she said.
“Good policy decisions now will ensure that future generations are not paying for an overly generous pension system which we can no longer afford."
But the Australian Institute of Superannuation Trustees' (AIST's) chief executive Tom Garcia opposed any increase to the age pension eligibility age, arguing that previous moves to increase the age to 67 were an adequate response to Australia’s changing demographics.
“Raising the retirement age is a very blunt tool that will hurt a lot of involuntary retirees who - for all sorts of legitimate reasons – cannot work longer,” Mr Garcia said.
“The IGR shows that there is no need to panic. Increasingly productivity, higher labour-force participation, a maturing superannuation system and a sustainable age pension system will all contribute to building a stronger Australia,” he said.
The existing envisaged increase in the eligibility age from 65 to 67 over time will see government expenditure on age and service pensions rise from 2.9 per cent of GDP to 3.6 per cent of GDP in 2055, AIST said.
“This is much lower than almost every other OECD economy,” the institute said.
