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Should access to super and pensions depend on life expectancy?

Editor's Note.

Noel sent this piece in response to my editorial comment on the Voice referendum and access to superannuation, which is reproduced below. Firstlinks specialises in pension and superannuation content, as well as investing, and there is a legitimate discussion on whether access should relate to life expectancy rather than age. Readers commented, for example, that there might be a case for men to have earlier access than women because men live shorter lives.

***

From last week's editorial

I have no intention of giving a personal opinion here on the referendum on the creation of an Indigenous Voice to Parliament so I simply quote this exchange on possible implications for superannuation. ABC Podcasts is running a series called 'The Voice Referendum Explained' with presenters Fran Kelly and Carly Williams. In the first full episode on 23 August 2023, there is this exchange with Tony McAvoy SC who specialises in native title claims and is a strong supporter of the Yes vote.

Carly Williams: But people still want to know, how would this Voice work and what kinds of issues would it be advising on?

Fran Kelly: That's right, Carly, I still want to know that. Tony McAvoy is firmly in the Yes camp but he's also Australia's first Indigenous Senior Counsel and an experienced barrister and he was on the Referendum Working Group so I thought he'd be a good person to ask about the kinds of things the Voice could advise on.

Tony McAvoy: One of the ones that I like to point people to is the superannuation legislation and the fact that it has been known for a long time that Aboriginal people do not have the life expectancy of the rest of the community. And I know personally know many people, including people in my own family, who have died before they've been able to retire and so it's a common thing in the Aboriginal community that people work all their lives and never get to retire.

And we should have in this country a conversation about whether superannuation legislation should be amended to allow us to access our superannuation earlier. The Voice cannot tell the government what to do. I cannot tell the government that must do this, but I can say let's have this discussion, and you make the decision.

Fran Kelly: That was so interesting to me, Carly. I've never thought about the shorter life expectancy of Indigenous Australians in terms of are they living long enough to enjoy their superannuation, for instance? That's a pretty straight up and down equity issue right there, isn't it? But unless it's pointed out to policymakers, it just might not occur to anyone.

Carly Williams: Absolutely. So that's the sort of thing the Voice could look at.

My only comment is to note that a leading Indigenous Barrister and Senior Counsel, when asked to identify a subject that the Voice might advise on, chooses early access to superannuation.

Graham Hand

***

From Noel Whittaker

On 22 February 2023, the full Federal Court began hearing a case that could have huge implications across Australia. It was brought by 65-year-old Wakka Wakka man, Uncle Dennis, who was seeking to access the age pension three years early on the grounds that, as Indigenous men are expected to live for three fewer years than non-indigenous men, their pensionable age should be reduced correspondingly to 64.

His case argued that the Commonwealth’s failure to account in the pension rules for differences in life expectancy breaches section 10 of the Racial Discrimination Act. His lawyer, Ron Merkel, KC, argued that indigenous people’s lower life expectancy ‘is closely connected to race’.

The court reserved its decision. The wealth of research about life expectancy has found that the main factors that determine life expectancy are exercise, diet, having a partner, and having a sense of purpose rather than race.

Lifestyle matters

There are parts of the world known as the Blue Zones where people regularly live to 100 – they include the islands of Okinawa, Japan; Sardinia, Italy; Ikaria, Greece; the Nicoya province of Costa Rica; and the Seventh-Day Adventists in Loma Linda, California – but the reason for their exceptional longevity is nothing to do with their race. It’s to do with their lifestyle.

These communities consume around two to three pieces of fruit a day and three to five servings of vegetables. The disturbing fact is that less than 10% of the modern world eat this amount of fruit and vegetables daily although those who do have the lowest rates of heart disease and cancer in their communities. Furthermore, most of the Blue Zone people enjoy a glass of wine but not to excess.

It is a fact that the average life expectancy for an indigenous person in Australia is lower than that of a non-indigenous person, but that’s the nature of the mathematics. 80% of indigenous people live healthy lives and would have the same life expectancy as other Australians, but there are about 20% who do not have a healthy lifestyle.

The effects of lifestyle on life expectancy are not confined to Australia. For example, in England, there is a 10-year difference in life expectancy between the North and the South. The greatest amount of binge drinking is in Newcastle at 29.2%. The lowest is in East Dorset at 8.8%. Chilton in Buckinghamshire averages 147 deaths per 100,000 a year from smoking; in Knowsley in the North West the proportion is 366 deaths a year per 100,000.

The final court decision

Recently the court handed down its decision. Despite recognising the ongoing gap in life expectancy, the Court stated that Uncle Dennis did not:

"enjoy the right to apply for and receive the age pension 'to a more limited extent' than non-indigenous men born on or between 1 January 1957 and 31 December 1957."

What troubles me most about this case is it ignores a whole raft of people who have a lower life expectancy due to a wide range of circumstances. Poverty, gender, and living in regional Australia are all elements that contribute to lower life expectancies for a range of people.

The time, effort and money spent on a case like this would be better used to create programmes that improve the life expectancy of all Australians, including indigenous people, whose life expectancy is shortened because of their circumstances.

 

Noel Whittaker is a leading authority on personal investing and financial advice and the author of 23 books including 'Retirement Made Simple'. This article is general information. See noelwhittaker.com.au.

 

8 Comments
Tony Dillon
September 16, 2023

Spot on Noel.

Gaps exist in life expectancy, health, and employment outcomes, between city dwellers and people living in remote communities, whether Indigenous or not. It just so happens that a far higher proportion of the Indigenous population live in remote locations compared to non-Indigenous. Such outcomes are dependent on social determinants such as education, employment status, housing, income, and access to health care, all of which are limited in remote living. They are not so much dependent on race.

SGN
September 15, 2023

My view to previous Comment ?

That is one Big mismatch to have all the fund in super ?

TonyD
September 15, 2023

Rather than pontificate about lifestyle, how about we seriously address the disadvantage that is borne of structural inequality.

Manoj Abichandani
September 14, 2023

Noel

I like your view in this time wasting cases.

I have another situation for you - which is reverse to your of Uncle Dennis - I would like your opinion on wheather she should take her matter to court.

There is a retired lady (54 year old) married to a retired male (59 Years old) - both live in a very comfortable home which has no debt. She cannot access her super due to preservation rules. She does not want to go on unemployment benefit - both have about $3.8M each in super. She has to depend on her husband for every dollar she spends - yet she does not to divorce him.

Further her super fund earns about 6% return or $228,000 every year for which the fund has to pay 15% tax or $34,200 which reduces her retirment benefit. Whereas she could move $1.9M in pension phase and protect at least 1/2 of this tax. She is happy to sign whatever centrelink wants, that she will never claim any benefit, ever. In your opinion are the preservation rules fair - does she have a case for the courts to decide.

Yesterday he refused to buy her coffee with her breakfast at the Maccas. Is that fair ?

Disgruntled
September 15, 2023

I'm pursuing early release at the moment.

Was told it could take up to 28 days to get a response, so a couple more weeks or so and I should have a response. Hopefully it's a yes.

Dudley
September 14, 2023

"in England, there is a 10-year difference in life expectancy between the North and the South":

"Shit-life syndrome" - from 25:00
https://www.youtube.com/watch?v=BK68yyrKUOA

Steve
September 14, 2023

Its the modern world. You blame factors that are easy to point at like race or gender, see a mathematical difference and presume or assign a causation effect. As pointed out the difference is NOT due to race, it is due to lifestyle. Imagine the outcry if one asserted aboriginals were less intelligent than the rest of the population because of poorer educational outcomes. Of course its not a race issue, its an education issue. You can't pick and choose when being in a disadvantaged group is due to your race or due to your circumstances. Ditto for the "gender pay gap" when they simply compare average male vs average female incomes. No attempt to compare equal jobs, just the overall average. As men do many of the higher paying jobs (eg FIFO) and women often work part-time, of course the averages won't be the same. But I am sure if more women want to go the FIFO route their average incomes will increase. Where you choose to participate in the workforce is of course your choice.

June
September 15, 2023

Hi Steve, you raise some very good points as does Noel. I have indigenous ancestry and come from a very "blue" collar background but expect nothing more than a fair go, as my parents did. Work hard, save, give what you can to others and don't judge. However, our youngest daughter did FIFO to the mines, as a professional in her field, but still earnt less than a male doing the same job. She didn't whinge, just got on with it. On the other hand, we have a family member who worked hard, saved over $100k by early twenties and blew the lot on good times despite being encouraged to put his money into a house....housing inequality for the young, maybe or maybe not. Plenty of smashed avo around too!

 

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