New Age Pensioners:Trends in Wealth
Hazel Lim-Applegate, Peter Mclean, Phil Lindenmayer and Ben Wallace
Department of Family and Community Services
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With increasing wealth and greater take-up of superannuation, an increasing proportion of Australians should reach Age Pension age with sufficient income and assets to receive only a part-rate Age Pension, or to be able to meet their own financial needs in retirement. The Government’s Intergenerational Report shows that this trend is expected to continue and is vital to the maintaining the affordability of the Australia’s retirement incomes system in the longer term.

Understanding the patterns of wealth of Australians as they reach Age Pension age, and how these change over time, is important to tracking this critical trend. Equally important to the long-term picture for the Australian retirement incomes system is whether part-rate Age Pensioners draw down their assets in retirement (and if so, how quickly). Understanding patterns of asset draw down will allow us to understand the degree to which part rate Age Pensioners will need to draw more heavily on the Age Pension in their retirement.

There are three parts to the paper. The first part is a detailed Australian and international literature analysis of wealth patterns of older people. The second part is a cohort comparison (using administrative data) of the wealth of comparatively recent groups of Australians reaching Age Pension age and applying for a pension. The third part (drawing on the FaCS Longitudinal Dataset) tracks the change over time in the asset holdings of a cohort of part-rate Age Pensioners and analyses the patterns of this change, providing clues for likely future trends.

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