Updated 01 July 2025
The Age Pension was initially introduced in Australia in 1909 when the average life expectancy was below the eligibility age. It was thought that most people would not live long enough to receive it, and those that did would not get it for long.
Now Australia enjoys one of the highest average life expectancies in the world (significantly higher than USA and UK).
The pension was designed to provide income support to older Australians who meet age and income requirements.
It is funded by Australian taxpayers and it accounts for a huge and growing chunk of our national expenditure.
Nearly 80 per cent of people over the age 65 are receiving some form of payment from the government. That’s more than 10% of the entire population of Australia – and that does not include disability pensioners or self-funded retirees.
The numbers of people in retirement are growing – and they are living longer – and they are requiring (and demanding) increasingly expensive care, medications, treatment and accommodation.
What is even more concerning is the falling numbers of people left remaining in the workforce behind them to pay for it all. Families don’t have as many kids as they used to, so there are fewer ‘workers’ left in the system to pay for the older generations ahead of them in line.
The Australian age pension system is different from most other countries, which often sets limits on a citizen’s pension depending on how much they have personally contributed to it throughout their working life.
But in Australia it is just a flat rate regardless of contribution, although it is subject to eligibility tests for income and assets. In other words, if you earn or own more than a set amount, you won’t receive the full pension.
Australia raised the pension age from 65 to 67 in 2023.
As life expectancy has increased, so has the age at which governments around the world will fund a pension.
As from June 2025, Australians are now been required to wait until the age of 67 until they can get the age pension. This has happened with little protest, which is in contrast to the demonstrations and riots that have occurred in France, when that country lifted its pension age from 62 to 64 in 2023.
There has also been a backlash in the UK over a move to raise the pension age to 67 for people born after 1960 and to 68 for those born after 1977.
Denmark recently passed laws to lift the pension age from 67 to 70 by 2040, the highest in Europe, but it has led to some protests.
China is considering a plan to gradually raise its pension age to 65 years for all citizens.
| Country | Life expectancy | Retirement age |
|---|---|---|
| Australia | 83.1 | 67 |
| Denmark | 81.18 | 67 (70 by 2040) |
| Italy | 82.2 | 67 |
| France | 81.92 | 64 |
| UK | 80.10 | 66 (gradually rising to 67 by end of 2028) |
| USA | 76.37 | 65-67 (depending on year of birth) |
| China | 77.62 | 65 (proposed) |
| * Life expectancy figures from the World Health Organization | ||
At present in Australia the family home is entirely excluded from the assets-test.
Is it conceivable that there may come a time when – in addition to annual income tax returns – everyone will be required to disclose a personal inventory of assets and keep the government informed of changes? In this manner, the government will know if you sell or give away any assets, and they will reduce your eligibility to receive government assistance.
Could the government also consider restricting pension benefits to a percentage of the total amount of tax paid by the person during their lifetime? This would be consistent with the modern trend towards ‘user-pays’ and broadly in keeping with the age pension systems of many other countries.
I predict that the Australian government will introduce tighter rules on how much senior Australians can own and earn and still qualify for a part pension. It might increase the eligibility age from 67 to 70. It might partially reduce the exclusion of the family home by capping the value to something like $2m, similar to the Government’s 2025 attempt to cap super. Time will tell.
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Check out the full report containing all 10 Estate Planning Predictions from senior Australian lawyer Rod Genders. Valuable insights to prepare for the future and help protect yourself, your family and your assets.
