Keeping Australia's older workers in the labour force. A policy perspective.
Abstract: As in other western industrialised countries the structural ageing of the Australian population has significant labour market implications. Government has responded with a range of policies to persuade older workers to abandon early retirement and/or remain in the workforce past traditional retirement ages. But whether this generation of workers will be prepared to change their retirement plans in response to policy encouragement, and whether current policy measures will translate into significant numbers of older workers extending their labour force participation is uncertain. Using the Australian Survey of Retirement Attitudes and Motivations (ASRAM) a recently completed, nationally representative survey of Australian workers aged 40-59 years we find that while the Government message about working longer is getting through, older workers are relatively unresponsive to current policy measures. Other policies, especially policies outside the financial realm, are needed to maximise the number of older Australians in the labour force.

Keywords: Retirement, Older workers, Labour market
Article Type: Report
Subject: Labor policy (Analysis)
Retirement (Social aspects)
Labor market (Demographic aspects)
Labor market (Social aspects)
Aged (Employment)
Aged (Demographic aspects)
Aged (Surveys)
Authors: Walter, Maggie
Jackson, Natalie
Felmingham, Bruce
Pub Date: 12/22/2008
Publication: Name: Australian Journal of Social Issues Publisher: Australian Council of Social Service Audience: Academic Format: Magazine/Journal Subject: Sociology and social work Copyright: COPYRIGHT 2008 Australian Council of Social Service ISSN: 0157-6321
Issue: Date: Winter, 2008 Source Volume: 43 Source Issue: 2
Topic: Event Code: 530 Labor force information; 290 Public affairs Canadian Subject Form: Labour policy; Labour market; Labour market
Product: Product Code: 9108650 Labor Regulation & Services; 9108912 Retirements (Honors) NAICS Code: 92615 Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors; 92119 Other General Government Support
Geographic: Geographic Scope: Australia Geographic Code: 8AUST Australia
Accession Number: 182273018
Full Text: Introduction

As in other western industrialised countries the proportion of older Australians is rising. While structural ageing is not yet as pronounced as it is in Europe, this changing demographic profile has significant labour market implications. Population projections indicate that over the next 25 years around seven million Australians will exit the labour market through retirement, to be barely replaced by those at labour market 'entry age'; that is, those turning 18 years. These figures are inclusive of international migration gains of 110,000 per annum (ABS 2003). To put this scenario into perspective, in the previous 25 years, less than four million Australian retirees were replaced by seven million labour market entrants (Jackson & Felmingham 2004).

The Policy Context

In response to the fiscal and labour market implications of population ageing the Australian government is now anxious to maintain older workers in the labour force. In a similar fashion to the governments of other industrialised nations (see van Dalen & Henkens 2002) a range of policy initiatives have been introduced over the last decade to persuade older workers to abandon early retirement plans and/or remain in the workforce past traditional retirement ages. Three specific Australian policy initiatives are relevant to this paper. One, the Pension Bonus Scheme (PBS), introduced in 1998, is a direct financial incentive which encourages workforce participation past the age of 65 via a lump sum tax free bonus to those who defer claiming (and are entitled to claim) an Age Pension (Centrelink 2007b). The other two policies revolve around the simplifying and changing of superannuation access and taxation arrangements. The first of these is the Retirement Transition Measures whereby, from July 2005, an employee, once they reach their 'preservation' age (e.g. for those born before July 1 1960, the age is 55), can reduce their working hours while still maintaining their income by accessing superannuation benefits through an 'income stream'. Second are the Budget May 2006 measures that remove the 15 percent tax on superannuation payments for workers retiring after the age of 60.

This overt policy encouragement for longer workforce participation is a marked contrast to that operating previously. In the 1980s and early 1990s early retirement for older workers was perceived as alleviating unemployment among the young and facilitating the exit of those workers affected by labour market structural adjustment. As van Dalen and Henkens (2002) note, during this period, early retirement, often around age 55, became almost standard practice for workers in the industrialised world. In Australia, for example, the Mature Age Allowance was introduced to cater specifically for unemployed workers aged over 50 facing difficulties in a tight labour market (Lim-Applegate 2004). With different reporting and 'mutual obligation' requirements the Mature Age allowance treated these workers as likely to be permanently out of the labour market, in contrast, the current policy direction offers incentives to longer workforce participation and removes disincentives to participation, in the case of the Mature Age Allowance eligibility changes occurred through the late 1990s and the payment is now effectively cancelled with no new claims permitted since September 2003 (Centrelink 2007a).

The Determinants of Retirement

Retirement is not a single dimensional decision; both push and pull factors influence the when, where, how and why of retirement (Jackson, Walter, Felmingham & Spinaze 2006). Theorising its determinants is complicated by the rapid pace of economic, social cultural and political change around the concept and the act, but it clear that retirement is a multiple factor event, not all of them determined by the individual. Many of these have been identified to a greater or lesser extent in retirement research literature in Australia and other western countries. Monetary or financial aspects are the most commonly examined, focusing on the financial preparedness, or unpreparedness, for retirement of older workers and the interaction of public and private pension arrangements, age and labour market policies. The age of pension entitlement commonly acts as proxy retirement age, with this tendency strengthened by the existence of financial disincentives to continue labour market participation past these ages (Kune 2003; Gruber & Wise 2005). A growing body of literature also indicates that non-monetary aspects such as health, lifestyle and leisure factors, social relationships and job satisfaction also influence retirement outcomes, as do social and labour market pressured to retire. Employers' attitudes towards older workers, understandings of 'appropriate' retirement ages and the attitudes and the wishes and retirement decision of partners are also all highly significant in retirement decisions (Henkens 1999; Taylor, Tillsley, Beausoleil, Wilson &Walker 2000; Henkens and Van Solinge 2002; Shacklock and Brunetto 2005). For example, recent Australian retirement data finds that retirement for a substantial proportion of older workers is involuntary, preceded by ill-health or redundancy (ABS 1998; 2006; Warren 2006). The orientation of older works to work and retirement has also been identified as a key determinant in retirement decisions (Taylor et al. 2000). This last facet is especially relevant for this study in its location of the more intangible retirement motivations and the tendency of these to be overlooked in current policy measures.

The Match between Retirement Policy and Retirement Intentions

Although the intentions of the current policy direction, to keep older workers in the labour market for longer, are manifest, their effectiveness is not. Indeed, they may well be out of kilter with older Australian workers' attitudes towards retirement (Jackson et al. 2006). Older Australian workers, in the labour force during the earlier period of active policy encouragement for early retirement, may be unwilling to now change their expectations. Overseas studies, for example, find that for most workers the decision to retire starts long before the actual retirement date, and suggest that many older workers hold specific retirement intentions (Henkens 1999; Phillipson 2004). Additionally, the economic focus of current retirement policy does not necessarily tap into the aspirations and motivations of older Australian workers. As outlined above, retirement is a multifaceted phenomenon, and current knowledge of how the varying facets interact to determine the labour market decisions of older workers is limited.

Moreover, the evidence to support the current policy direction is scant. In a recent review of Australian literature on older workers' expectations and plans for older age, Quine and Carter (2006: 7, 2) find a 'paucity of research' with the literature consisting more of opinion than empirical findings. Also, what empirical research existed lacked a future orientation, tending to concentrate on what older workers were currently doing rather than their expectations or plans. Therefore, the efficacy of current Australian retirement policy reform is, to date, untested. The key questions we need to ask are: first, whether or not older Australian workers will be prepared to consider changing their retirement plans in response to policy encouragement; and second, are current policy measures likely to translate into significant numbers of older workers deferring their retirement or extending their labour force participation? This paper begins to answer these questions by presenting the policy related results of the Australian Survey of Retirement Attitudes and Motivations (ASRAM).

The Study

The ASRAM study is a nationally representative survey of 2501 Australian workers aged 40-59 years. The major aim of the ASRAM is to assess the extent to which older workers' retirement intentions and motivations are in line with government retirement policy and aspirations. This direction separates this survey and its results from other recent surveys on retirement intentions. Specifically, the ASRAM study assesses: how effective current policy might be in persuading older workers to remain longer in the workforce than either 'currently expected', or 'beyond age 65'; how amenable they are to deferring retirement or extending their working life in general; and the perceived incentives and disincentives to facilitating retirement behavioural change.

The survey was conducted by telephone between July and November 2006 and sampled respondents currently participating in the paid workforce. This age cohort was selected as those likely to have at least begun to contemplate their own retirement. The sample was also stratified by state to allow intra-national comparisons. The active labour force status sample criteria made contacting respondents a lengthy task, with only six per cent of phone calls making contact with a survey-eligible individual. Despite this low contact rate, the actual response rate was high. Only 379 (13 per cent) of eventual contacts who were survey-eligible refused to participate, giving a response rate of 87 percent.

The findings reported in this paper are weighted to be nationally representative. Comparison of the unweighted sample attributes with 2001 census data finds that the ASRAM sample is comparable with national and state averages, but more female, slightly older and slightly better educated. As show, n in Table 1, in common with most survey data, women are over-represented amongst respondents (57% of respondents compared to 46% of workforce in this age group) and men similarly under-represented. The sample is similar to national age dispersion and education patterns apart from a higher proportion of respondents with bachelor or post-graduate qualifications and a small over-representation of those in the oldest age bracket and a matching under-representation of those in the youngest age bracket. Those from non-English speaking backgrounds are also under-represented. The occupational structure, employment status and partnered status of the sample closely match national averages apart from an over-representation of professionals. The sample's socio-demographic characteristics, therefore, are broadly compatible with those from the general population of older Australian workers, although the gender bias towards female respondents should be kept in mind in interpreting these findings.

Most of the study's respondents are Australian-born, partnered, and just over one-third hold a bachelor degree or higher. The respondents are also predominantly in full time employment and well-skilled, with a substantial proportion in professional or para-professional occupations. Those listed as 'other' are either working in more than one job or are self-employed. More than three quarters are also employees, working for either a private (46%) or government (32%) employer (not shown here).

While socio-demographic attributes have obvious implications for retirement outcomes, for length reasons, this paper predominantly reports full sample results. Results analysed by gender, occupational status and age group in more detail will be reported in later papers.

Retirement Policy Options

The ASRAM study collected data on attitudes to, and interaction with, current and new retirement policy along three different dimensions. The first dimension examines current policies. The second assesses respondents' preferred policy options for coping with ageing population issues. The third canvasses respondents' attitudes towards two different sets of policy options for extending older workers workforce activity. All three dimensions are reported here.

Willingness to Consider Working Longer

A substantial proportion of respondents are aware of population ageing and associated labour market and fiscal policy issues. Eighty-three percent report being aware or very, aware of government concerns about the ageing of Australia's population and 45 percent say that government concerns on the need for Australians to work longer have influenced their own retirement thinking either a great deal or to some extent. A majority of older workers are also prepared to consider remaining longer in the workforce. As shown in the following figure, just over half of the respondents (55%) are either very likely or likely to consider extending their participation in the workforce past their expected retirement age, and around 44 percent are very likely or likely to consider working past the age of 65. If we add the six per cent who indicated that they never wanted to retire (n=156) and were therefore not asked either retirement postponement question, then at least half of the current older workforce will consider working longer and/or working past the current generally accepted retirement age of 65 years. These figures are in line with Newspoll data which found 43 percent expect to continue working past age 65 (Hamilton & Hamilton 2006).

The initial answer to whether older workers are willing to change their retirement plans, therefore, is affirmative: older Australian workers are both aware of Government concerns regarding the impact of population ageing, and prepared to consider remaining in the workforce longer, in line with these concerns.

Whether such willingness to consider will translate into later retirements is less clear. The link between retirement intentions and actual behaviour is muddied by social, financial and personal complexities. The evidence suggests that attitudes towards early retirement are changing in the direction of longer working lives. Recent Australian studies (ABS 2006; NATSEM 2005) find increases in the labour market participation of older workers, especially women, and these results are in line with data from overseas studies (Van Dalen and Henkens 2002). Data also suggest that many older workers, again especially women, do not have sufficient superannuation or financial assets to allow them to leave the workforce (see Olsberg 2004). Conversely, other results suggest that a substantial proportion of older Australian workers still aspire to early retirement (Shacklock and Brunetto 2005; AARP 2005; HILDA 2004). Further, as outlined earlier, retirement is not always a directly selected choice with ill health, family obligations and redundancies leading to unchosen and often earlier than anticipated retirement.

Efficacy of Current Policies

To test current policies aimed at encouraging older workers to defer retirement the ASRAM survey asked specifically about workers' knowledge of, and planned usage of: the Pension Bonus Scheme; transition to retirement measures; and the removal of tax on superannuation payments for workers retiring after the age of 60.

The Pension Bonus Scheme

The Pension Bonus Scheme (PBS), pays a lump sum tax free bonus to those who defer claiming (and are entitled to claim) an Age Pension for at least one year and continue to work at least 960 hours of 'gainful' work each year (Centrelink 2007c). Claimants must register as a member of the scheme and the bonus is paid as a non-taxable lump sum once the Age Pension claim is eventually lodged. The bonus amount depends on the deferment duration, the amount of Age Pension due and partnered status. The maximum payable for an individual is currently $1283.30 for a one year deferment rising to $32083.60 for the maximum five year deferral.

Despite the length of time that the PBS has been in operation, only one quarter of respondents are aware of its existence. As shown in Figure 2, while awareness does increase significantly by age with those workers in the oldest age bracket, most likely to be aware of the PBS, even among this group, awareness remains below 40 percent. Among those few who are aware of the PBS (n=923), less than half indicated that the Scheme is very likely (10%) or likely (30%) to persuade them to remain in the workforce past age 65. It would appear, therefore, that while older Australian workers are prepared to change their retirement plans, the Pension Bonus Scheme is currently having little impact on such intentions.

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.

Another question emerges from consideration of the superannuation transition measure; will take up of this option result in increased workforce participation among older workers? While such changes obviously aim to encourage those able to retire at age 55 to defer, this may not always be the actual outcome. Older workers might instead be tempted into reducing workforce activity at an earlier age than would be the case without access to this measure. Perversely, the end effect of such usage would be an overall reduction in workforce participation among older workers. To test the efficacy of the policy in encouraging longer workforce involvement, those who indicated awareness of the policy were asked two additional questions. The first related to how likely the changed regulations would be to increase their workforce participation, and the second, how likely they would be to use the changes to phase in retirement, but not change their intended retirement date. It should be noted that these options were posed as separate questions and the responses are not mutually exclusive. Rather the point is to comparatively test how attractive the respondents found the two different uses they could make of this option.

As shown in Figure 3, a majority indicated they are likely to consider utilising the policy change on both questions. However, the ability to access superannuation to reduce workforce activity, rather than actually extend the length of the working life, is significantly more popular. These results, therefore, question how effective the policy will be in actually increasing the working life of those who take up the option. The likelihood that the policy outcome might be an actual reduction in workforce activity among older Australian workers is substantial.

Superannuation Changes: Removal of Tax on Superannuation for the Over 60s

The survey was run in mid 2006, so reaction to the superannuation changes announced in the 2006 May budget was also canvassed. Specifically, respondents were asked about their awareness, and likely impact on their retirement intentions, of the measures to remove the 15 percent tax on superannuation payments for workers retiring after the age of 60. As can be seen from Table 3, the response to this change is positive, with around half of all respondents indicating that the measure is likely to persuade them to remain working until age 60. Moreover, the vast majority of respondents indicated an awareness of the policy change, with less than one per cent spontaneously indicating that they are unaware. Therefore, at least at this relatively early stage, this budget measure appears likely to be successful in persuading older workers to defer their retirement until at least age 60.

Policy Options for Coping with an Ageing Population

In recent years, international retirement studies have addressed problems posed by an ageing population (see BIB 2002; AARP 2005; Merrill Lynch 2004 for examples).

As a comparative measure the ASRAM study posed questions on two central themes of this topic: the difficulty of maintaining age pension schemes in the face of larger proportions of retirees; and how to address emerging national labour force shortages.

Policy Preferences for Maintaining Age Pension Schemes

To assess Australian views on concerns related to the maintenance of age pension schemes, the current study selected a version of an already established question. Used across Europe by the BIB Federal Institute for Population Research (2002) Population Policy Acceptance Study (PPAS), this question lists a set of policy actions to ensure that age pensions can continue to be afforded. As in the BIB study, ASRAM respondents were asked to nominate their first and second preference policy options. The results, listed in rank order of first preference are outlined in Table 4.

Although raising taxes is the most preferred option, there is little difference between the first three options. All three are clearly preferred over lowering pension benefits. These results are similar to those from European Population Policy Acceptance Study where raising taxes was nominated first by a majority in a majority of countries. The second Australian preference, raising the retirement age, however, was neither the first nor second preference of any of the ten country samples (BIB 2005). This result is also at odds with that found in qualitative Australian research (Hamilton & Hamilton 2006) where the idea of raising the retirement age, seen as Age Pension entitlement age of 65, was firmly rejected by focus group participants. However, these respondents were not asked to rank this idea against others and while not acceptable to most, it still might be preferred to less acceptable options. The relative lack of support for the last two options is unsurprising given that such pronatal policy is relatively alien in the Australian context. However, such policies do feature in the pension regimes of Eastern European counties (Velladics et al. 2005).

Addressing Labour Market Shortages

To ascertain Australian attitudes on policies aimed at increasing the size of the labour market, a second set of policy options was tested. The four options reflect the unique Australian situation. The option of encouraging more women to work, for example, emerges from the expectation found in the Intergenerational Report (2002) that Australian women expect to continue to increase their labour force participation over the next 20 years. The two options on skilled migration and guest workers were included to test the comparative acceptability of these policies.

As shown in Table 5, a majority of respondents rated all policy options as very acceptable or acceptable. Encouraging more women to work is the most accepted item with a combined acceptability rating of over 80 percent. Allowing more guest workers into Australia is the least acceptable, with close to half of the respondents finding this item either not very acceptable or completely unacceptable.

The acceptability of the option on allowing more skilled migrants is higher than that found among Australian respondents to the IRSS (AARP 2005) survey. In that study a similar, but slightly differently phrased item of 'increasing the size of the labour force by allowing more immigrants into the country to work' is rated acceptable by 48 percent of the Australian sample. This rating was at the lower end of acceptability compared to other Western countries such as Sweden (78%) and Canada (60%).

Policy Options for an Ageing Society: Carrots and Sticks

The ASRAM survey was also interested in how older workers would respond to both policy disincentives to retire earlier and incentives to retire later. That is, what might most usefully extend the working life of older Australians: the carrot or the stick? Two sets of policy options were provided. In the first set the items involved a reduction of current entitlement or options relating to the age pension and superannuation lumps sum payments. This set might be characterised as policy 'sticks'. The other set, which can be seen in terms of policy 'carrots' canvasses a range of possible policy incentives for workers to remain longer in the workforce.

Policy Disincentives to Earlier Retirements (the Sticks)

The results from the entitlement-reducing set indicate that less than 10 percent of respondents find any of the policy options very acceptable. Only the option of raising the Age Pension qualifying age for those who had retired early on lump sum superannuation is rated acceptable by more than half of the respondents. Slightly contradictorily, the least acceptable item is abolishing lump sum superannuation, with around 70 percent finding this option unacceptable. Given the loss of currently-held entitlements involved in all policies in this group it is perhaps more surprising that a substantial minority rate most of the options as acceptable.

The second--more positive--set of options asks about the persuasive effect of a range of policies. As shown in Table 7, all options are popular, with a majority indicating that five of the six are likely or very likely to persuade them to work longer. Offering more training for older workers is the only option not considered likely to extend working life for a majority of respondents.

The item relating to mentoring or training roles for older workers is also considered strongly persuasive. Clearly, although workers respond positively to financial incentives, the option to pass on their skills and experience also rates highly. This result has significant policy implications.

Rating the Policy Carrots and the Sticks

While a direct comparison of the effectiveness of the two policy sets is not possible, some inferences can be made. The sticks are largely unacceptable to most respondents while a clear majority rate the carrot items as likely to persuade them to extend their working lives. We might speculate that policy carrots will be more effective than policy sticks in raising the retirement age of older Australian workers.

Principal components analysis of the two policy option sets finds that both the 'sticks' and the 'carrots' can be reduced to the one principal factor. The respective statistics for each set are detailed in Table 8. The reduction of the policy options to a single set of scores allows the respondents' willingness to consider working longer to be analysed against with their reaction to policy incentives and disincentives.

For this analysis, the responses relating to the likelihood of working longer (Q37) and the likelihood that they would work beyond age 65 (Q38) are dichotomised into two attributes; likely and unlikely. A t-test using these groupings is then undertaken using the stick and carrot scale scores. In each case a significant positive relationship between respondents' policy scale scores and their willingness to consider remaining in the workforce is found. That is, those respondents most likely to rate the policy sticks as acceptable and to report that the policy carrots are likely to persuade them to defer their retirement are also more likely to indicate that they are willing to remain in the workforce for longer, and/or to work past age 65. The mean score on both the carrot and stick scales is significantly higher for those who indicate a willingness stay in the workforce than for those unlikely to change their plans. A similar pattern is found on the mean scores for those willing to work past age 65.

This result is important because it indicates that the substantial number of respondents willing to consider working longer are also those most likely to be influenced by policy measures, both incentives and disincentives. Encouraging them to move from willing to consider to actually extending, working life, might rely on the right policy measures being put in place.


These findings strongly suggest that older Australian workers will be prepared to change their retirement plans in response to policy encouragement. While older workers' retirement attitudes may have been formulated when early retirement was the norm, such workers now appear not only to be heeding Government concerns about the ageing population, but be taking these into consideration when planning their own retirement. The Government's message on later retirement has got through to a substantial proportion of the older Australian workforce. However, the efficacy of the current policy tools in place to translate this message into action is less supported. The removal of taxation from the superannuation entitlements of those aged 60 Or over seems likely to extend working lives at least to the entitlement age of 60. The Pension Benefit Scheme and transition to retirement measures do not appear as influential on retirement intentions. In the case of the latter the measures could actually reduce, rather than increase, the labour market participation of older workers.

In short, older workers recognise that the ageing population raises unique difficulties for the nation, yet are, as yet, relatively unresponsive to current policy incentives. What policies might better reinforce the Governments' message on deferring retirement among older workers? The results of this study suggest that policy makers need to cast their policy net more widely. As shown, those most willing to consider deferring retirement are also those most likely to respond positively to policy initiatives, especially incentives, to work longer. As importantly, financial incentives are not the only, or even necessarily the primary, motivating factor for older workers. In this study, non-financial measures such as the opportunity to mentor and train younger workers rated above a financial bonus for older workers or an increase in earnings limits for those on an Age Pension. To maximise the number of older Australian workers deferring their retirement, therefore, other policy options, especially incentives to remain in the workforce, will need to be developed and implemented. And such measures need to move beyond the financial realm.


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(1) This paper was supported under the Australian Research Council's Discovery Grant scheme (Grant No. DP0557922; Will Older Workers Change their Retirement Plans in Line with the Government's Calls for later Retirement?)
Table 1: Socio-demographic characteristics

Variable                            Frequency   Percentage   National *
                                        n           %            %
Gender (i)
Male                                  1085         43.4         53.7
Female                                1416         56.6         46.3
Age group (i)
40-44 years                            514         20.6         28.8
45-49 years                            734         29.3         28.4
50-54 years                            691         27.6         25.8
55-59 years                            562         22.5         16.9
Partnered Status (ii)
Single and never married               246         9.9          5.4
Married or Partnered                  1824         73.3         74.4
Separated or divorced                  370         14.9         18.0
Widowed                                47          1.9          2.1
Education level (iii)
Secondary Schooling only               871         35.1         48.3
Trade qualification or                 172         6.9
Certificate or Diploma                 581         23.4         31.3
Bachelor degree                        498         20.1
Post-graduate qualification            358         14.4         20.3
Country of Birth (iv)
Australia                             1963         78.8         64.2
Overseas English Speaking Country      286         11.5         10.7
Overseas Non-English Speaking          241         9.7          25.0
Employment Status (v)
Working full-time                     1625         65.0         64.4
Working part-time                      731         29.2         26.1
On annual leave or other               56          2.2          3.4
  temporary leave
Unemployed                             80          3.2          3.8
Other                                   9          0.4          2.3
Occupation (vi)
Managers and Administrators            269         10.8         11.9
Professionals                          766         30.7         20.2
Associate Professionals                328         13.1         12.9
Tradespersons and related workers      203         8.1          11.1
Advanced Clerical and Service          93          3.7          4.1
Intermediate Clerical, Sales and       365         14.6         15.8
  Service Workers
Intermediate Production and            126         5.0          8.8
  Transport workers
Elementary Clerical, Sales and         139         5.6          6.7
  Service Workers
Labourers and related workers          209         8.4          8.4

Data Sources: Unweighted Data ASRAM Survey 2006.

Notes: * Sources (i), (v), and (vi) only are for labour force

1. ABS (2007) Basic Community Profile, cat. no. 2001.0
(estimated for ages 40-59 from Table B411, Labour Force Status by
Age and Sex)

2. ABS (2007) Census 2006, cat. no. 2068.0 (estimated for ages 40-59
from. Social Marital Status by Age and Sex, and Registered Marital
Status by Age and Sex)

3. ABS (2008) Customised database, Highest Non-School Qualification
by Age (available from authors)

4. ABS (2007) Expanded Community Profile, cat. no. 2005.0 (Estimated
for ages 40-59 from Tables X01f and X01f, Country of Birth by Age
and Sex)

5. ABS (2007) Basic Community Profile, cat. no. 2001.0
(estimated for ages 40-59 from Table B41, Labour Force Status by Age
and Sex)

6. ABS (2002; Basic Community Profile, cat. no. 2001.0
(estimated for ages 40-59 for Table B27, Occupation by Age and Sex)

Table 2: Awareness and Usage of Superannuation Transition to
Retirement Measures

Variable                                  Age Groups
                              44-44      45-49     50-54     55-59
                              years %   years %   years %   years %

Awareness of Measure
  (n=2497) *
Very aware                     11.4      13.0      19.4      31.2
Aware                          24.1      30.3      35.3      33.8
Not very aware                 20.3      20.6      15.5      11.0
Not at all aware               44.2      36.1      29.8      24.0
Likelihood of Using Measure
  (n=1556) *
Very likely                     9.9      11.6      10.6      10.7
Likely                         28.5      21.9      18.7      15.2
Unlikely                       48.0      46.5      48.0      45.2
Very Unlikely                  13.6      19.8      22.5      24.1
Already using this option       0.0       0.2       0.2       4.8

* Chi Square Test indicates differences :n results between age groups
significant at p = .000

Data Source: Weighted Data ASRAM 2006

Table 3: Budget 2006 Superannuation Taxation Changes by Age Group

Variable                                    Age Groups
                                  44-44   45-49   50-54   55-59
                                  years   years   years   years
                                    %       %       %       %

Likelihood that policy change
will influence to stay in the
workforce to, or beyond
the age of, 60 (n=2292) *

Very likely                       16.4    18.7    16.5    25.1

Likely                            37.8    31.0    27.4    24.8

Unlikely                          25.2    30.7    27.7    19.2

Very Unlikely                     11.4    10.5    15.8    15.0

Not relevant, planning to          7.8     8.3    11.5    14.7
work past 60 years anyway
(spontaneous response)

Unaware of policy change           1.5     0.9     1.1     1.2
(spontaneous response)

* Chi Source Test indicates differences in results between age
groups significant at p = .000

Data Source: Weighted Data ASRAM 2006

Table 4: Preference Rating of Policy Options to Maintain Age Pension

Policy Options                         1st Preference   2nd Preference
n = 1997                                     %                %

Raising taxes                               29.3             21.0

Raise retirement age                        27.6             27.5

Abolish early retirement schemes            24.7             27.0

Lowering pension benefits                   11.1             14.3

Make age pension payments dependent         4.2              5.0
on the number of children

Requiring that children financially         3.1              5.0
support their retired parents

* Items rotated in order of presentation to respondents

** On this question around 20 percent of respondents either refused
to answer (n= 210) or spontaneously reported that they didn't know
(n=294). This very high proportion likely reflects the unpalatability
of the policy options offered in the set.

*** Most respondents 'accepted' the idea of a set retirement age.
Australia has never had an official retirement age but the
perception is likely linked to the age at which Age Pension is

Data Source: Weighted Data ASRAM 2006

Table 5: Acceptability of Policy Options to Increase the Australian
Labour Force

                       Very                    Not Very     Completely
Policy Option       Acceptable   Acceptable   acceptable   Unacceptable
                        %            %            %             %

Encouraging more       20.1         62.4         14.4          3.2
women to work

Encouraging            16.6         56.7         21.6          5.1
part-time workers
to work full-time

Allowing more          12.2         46.8         28.1          12.8
to migrate to

Allowing more          9.5          45.4         28.9          16.2
temporary guest
workers to enter
Australia for
jobs employers
say are hard to
get Australians
to do (n=2462)

Q29a. Policy options to raise the supply of labour might also need to
be considered. Please tell me how acceptable each of the following
options would be to you

* Items rotated in order of presentation to respondents

Data Source: We:ghted Data ASRAM 2006

Table 6: Acceptability--Policy Options Relating to Pensions and

Policy Option                          Acceptable    Acceptable
                                           %             %

Requiring those on an age pensions        9.3           40.1
to seek part-time or casual work if
they are fit enough (n=2481)

Raising the pension qualifying age        7.3           48.2
for retirees who retire early on
superannuation lump sum (n=2396)

Increasing age pension benefits           2.3           32.6
at a lower rate than in the past

Abolish the option to take                4.8           25.6
superannuation monies as a lump
sum (n=2397)

                                        Not Very     Completely
Policy Option                          acceptable   Unacceptable
                                           %             %

Requiring those on an age pensions        27.2          23.4
to seek part-time or casual work if
they are fit enough (n=2481)

Raising the pension qualifying age        25.2          19.3
for retirees who retire early on
superannuation lump sum (n=2396)

Increasing age pension benefits           31.0          34.2
at a lower rate than in the past

Abolish the option to take                34.4          35.2
superannuation monies as a lump
sum (n=2397)

Q296: Other retirement related policy options might also need to be
considered. Please tell me howacceptable each of the following options
would be to you

Data Source: Weighted Data ASRAM 2006Policy Incentives to Later
Retirement (the Carrots)

Table 7: Likelihood of Policy Options Extending Working Life

                                  Very                          Very
Policy Option                    Likely   Likely   Unlikely   Unlikely
                                   %        %          %          %

A reduction in rate of tax        41.9     40.1      13.7        4.3
for workers older than 60

More jobs that make use of        35.5     46.2      13.1        5.2
skills and experiences of
older workers in mentoring
or training roles (n=2409)

An increase :n the level of       33.7     46.3      14.4        5.6
income an Age Pensioner can
earn before their pension is
reduced (n=2359)

A bonus payment scheme for        26.0     41.4      22.9        9.7
all workers aged over 65
years (n=2368)

More jobs available that          21.6     45.6      23.3        9.6
accommodate the physical
abilities/restrictions of
older workers (n=2376)

Increased training options        16.8     33.1      34.8        15.3
for older workers to prepare
them for other kinds of work

# Respondents who spontaneously answered that they didn't ever plan to
retire or were planning to work past 65 anyway were excluded from
these analyses (n =varied by item 79-92)

Q35a: Here are some other possible policy options. Please tell me how
likely, or unlikely, each of these options would be to persuade you
to defer your retirement and remain in the workforce for longer.

Data Source: Weighted Data ASRAM 2006

Table 8: Factor Loadings For Entitlement Disincentive Policy Items

Values Re: Polity Sticks                                   Loadings

KMO                                                          .631

Requiring those on an Age pension to seek part-time or       .669
casual work if they are fit enough

Abolishing the option to take superannuation monies as       .720
a lump sum

Raising the pension qualifying age for retirees who          .614
retired early on superannuation lump sums

Increasing Age pension benefits at a lower rate than in      .568
the past

Eigenvalue                                                   1.66

Variance explained                                          41.66

Cronbachs Alpha                                              .53

Values Re: Policy Carrots                                  Loadings

KMO                                                          .846

A reduction in the rate of tax for workers older than        .799
60 years

An increase in the level of income an Age pensioner can      .765
earn before their pension is reduced

A bonus payment scheme for all workers aged over 65          .765

Increased training options for older workers to prepare      .764
them for other kinds of work

More jobs available that accommodate the physical            .763
abilities/restrictions of older workers

More jobs available that make use of the skills and          .697
experiences of older workers in mentoring training roles

Eigenvalue                                                  3.462

Variance explained                                           57.7

Cronbachs Alpha                                              .856

Extraction Method: Principal Components Analysis: Direct Oblimin
and Kaiser Normalisation Rotation.

Data Source: Weighted Data ASRA,M 2006

Figure 1: Likelihood of Older Workers Remaining Longer in the Labour
                  Very Likely  Likely   Unlikely   Very Unlikely

Consider working     14          41        30          15

Consider working     15          29        31          25
past 65

Q: 37: Overall, assuming continuing health, how likely are you to
consider extending your participation in the workforce past your
current expected age of retirement in line with government calls
for later retirement?

Q. 38: Again, assuming continuing health, how likely or unlikely is
it that you will consider continuing in the workforce past the age
of 65 years?

Data Source: Weighted Data ASRAM 2006

Note: Table made from bar graph.

Figure 2: Awareness of Age Pension Bonus Scheme by Age Group

                  40-44 years  45-49 years  50-54 years  55-59 years

Very aware           6            7           10           13
Aware               13           16           20           24
Not very aware      19           16           17           17
Not aware at all    62           61           53           45

Data Source: Weighted Data ASRAM 2006

* Those respondents interested in more details about the PBS were
directed to Centrelink

Note: Table made from bar graph.

Figure 3: How Might Use Access to Superannuation Transition
to Retirement Measure

                  Very Likely  Likely   Unlikely   Very Unlikely

Use option to       18          38        33          11
remain working

Use option but      17          49        27           7
still retire
at same age

If you did take up this option, how likely is it that it would result
in you doing the following:

Q33c: Remain in the workforce for longer than if you were not able
to access your superannuation while in the workforce?

Q33cr: Still retire at the same age, but use the opportunity to
work less than full-time and access your superannuation to phase in
your retirement?

Data Source: Weighted Data ASRAM 2006

Note: Table made from bar graph.
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