Australia is ageing at a slower rate than most developed countries, according to research by the OECD.
Those working in Australia have fewer elderly people to support and the OECD says this gives Australia more time to take measures to limit the effect of ageing on the pensions system.
The OECD average old-age dependency ratio, the number of people older than 65 years per 100 people, is 28 and will likely increase to 53 by 2050.
However, for Australia these numbers are lower — 25 and 41 — mainly because of the high rate of immigration of young adults.
Here’s how Australia compares:
“Given the relatively limited involvement of the government in pensions and the slower ageing process, public spending on pensions is low and expected to remain low,” says the OECD in its 2017 edition of Pensions at a Glance.
Public expenditure on pensions is 4% and will be 4% in the 2050s versus 9% and 10% for the OECD.
“Financial sustainability of the pension system therefore seems to be less of a concern in Australia than in many other OECD countries,” says the OECD.
It’s not all good news. Three-quarters of those aged 65 or more get a government Age Pension compared to roughly a quarter on average for OECD countries.
However, almost 42% have their age pension benefits reduced by a means test.
And the compulsory saving via the superannuation system introduced in 1992 is likely to reduce poverty rates among the elderly.
The old age income poverty rate in Australia is high at 26% compared to 13% across the OECD in 2015.
“This is partly related to the high prevalence of taking superannuation funds as lump sums rather than annuities at retirement,” says the OECD.
According to the Australia Bureau of Statistics (ABS), population ageing will have a range of implications for Australia, including health, size of the working-age population, housing and demand for skilled labour.
“Like most developed countries, Australia’s population is ageing as a result of sustained low fertility and increasing life expectancy,” says the ABS.
“This has resulted in proportionally fewer children (under 15 years of age) in the population and a proportionally larger increase in those aged 65 and over.”
Between 1997 and 2017, the proportion of people aged 65 years and over increased to 15.4% from 12.1%.
Data from the 2016 census clearly demonstrates the ageing of Australia.
The median age has increased to 38 from 37 at the 2011 census and today almost half of all voters are aged 50 or more.
According to Treasury forecasts, the number of Australians aged 65 will rise rapidly, from 2.5 million in 2002 to 6.2 million in 2042, or from 13% of the population to 25%.
The main cause is a fall in the birth rate. Australians are having fewer children and later in life.
The typical Australian family, according to the latest census numbers, has two children, or below the replacement rate of 2.1. In 1960, it was 3.4 children. Migration is currently maintaining population growth.