As the financial situation gets tougher for many older Australians, some are taking the plunge back into full time or part-time work but many fear that the implications associated with losing the pension are not worth the hassle. “Back in the workforce” may soon become the reality for many older Australians.
The New Zealand system for encouraging older workers to stay at work has many advantages. In New Zealand, unlike Australia, pensions are not means-tested and taxed from the first dollar, which means older workers do not lose out on dollars by continuing to work. Recently ANU Tax and Transfer Policy Institute Professor Miranda Stewart said the current system imposes a high tax on the income of pensioners or part-pensioners, and that potentially discourages them to work while receiving the pension. Means testing of our pensions means that a single person who earns over $4264 a year will lose their pension benefits at the rate of 50 cents per dollar. About 70 per cent of retiring Australians are affected by age pension means testingProfessor Stewart said Australia could encourage older workers to remain in the workforce beyond the age of 65 by decreasing effective marginal tax rates on older workers who rely on the pension.
Readers of The Retiree know that many companies are realising the benefits of older worker. Professor Julian Teicher from Monash University said in the video below: “Older workers bring maturity and wisdom to companies” and “they are a source of valuable life skills and company knowledge.” We must educate the community to let older workers back in the workforce but issues still remain that less than 20% of Australians over 65 still work.
CBA economist Kristina Clifton recently told the Australian Financial Review that the growth of part-time jobs and flexible work and the transition from labour intensive sectors such as mining and manufacturing to services sector jobs has encouraged older workers to keep participating in the workforce. She added that she expected participation among 55 to 64 year olds to continue to increase as Australia continues transition into a services economy. “People are living longer and you do need to stay in the workforce longer to fund your retirement. Any policies that increase flexibility and part-time work will help, as well as workplaces that value older workers and recognise them for their experience,” she said.
Reference: Australian Financial Review – December 13,2016.