Treasurer Peter Costello sees the looming shortage of young employees being solved by putting a carrot and stick to over-55 donkeys. Speaking at the Australian Financial Review Leaders lunch, he said higher employment participation rates of over-55's would have a much more immediate impact on maintaining high per capita GDP growth than raising fertility rates.
His "carrot" to achieve this is more flexible working arrangements and training and retraining, whilst his "stick" is raising the age at which people are able to access their superannuation. People born before 1 July 1960 can access super at age 55 whilst for those born after 30 June 1964 it's age 60. The implication is that these ages might be increased.
His scenario will most likely happen, but not necessarily for the reasons he states. Over 55's will need to keep working anyway as their savings are generally well below what would allow early retirement. Their savings accruals have been impacted by the taxes on superannuation , recent falls in sharemarkets, and the higher prospective assets required to finance a self funded pension with lower long term returns and household budget having to fund a 10% GST on living costs. 10 years ago long term interest rates were 10%pa (now 6%pa),over-55's could save super without 15% surcharge and projected retirement income budgets were free of 10% GST.
Posted Thursday, 8 August 2002
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