Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 60

Status, longevity and the age pension

Policy makers seem to overlook the fact that people of higher socio-economic status have longer life times. Unfortunately, there is little data from Australia to study this effect. It requires greater study considering the impact on financial planning for the high socio-economic client and the topical issue of increasing the age pension entitlement age.

Socio-economic status

Until 2005, the UK Office of Statistics published separate mortality tables every five years for six different occupational classifications. This is the best public mortality data set available at a national level related to socio-economic status. The classifications range from Class 1 (‘Professional’) to Class V (‘Unskilled’). The difference in average life expectancy from age 65 for these two classifications was 4.2 years for males and 4.3 years for females in the 2005 data. Since the first data in 1976, life expectancy increased more for higher status than for lower status.

There are a range of possible explanations. Unskilled occupations may have involved greater risk and lead to health problems in later life. Professionals may have developed better diet and health care habits that extend into later life. However there are deeper dimensions and career experiences within occupations.

Someone who has studied these deeper dimensions is Sir Michael Marmot. Originally from Australia where he graduated in medicine in 1968, he became an international expert in longitudinal studies of health and longevity. His book, ‘Status Syndrome’, published in 2004, is a comprehensive coverage of his work in a field that might be labelled psychosocial effects on health and longevity. My conclusions from Marmot’s work are that whilst health status and income are significant determinants of longevity, differences in longevity in later life are also due to the level of autonomy and engagement people have enjoyed in their careers.

A first implication of these conclusions is that financial planners lucky enough to capture clients with these fortunate career attributes as well as financial self sufficiency, need to factor in a substantially longer life time (and future improvement) than population averages.

A second implication relates to how age pension policy is being managed. In current public debate it is an easy logic to argue something like “since the age pension started in 1909, average life expectancy has increased by 25 years so we need to keep updating the age pension entitlement age”. Average life expectancy is a neat tool for this argument; however it ignores the dimensions around this average of people with different status.

For example, women now in their 50’s and 60’s who through child rearing and divorce may have had little opportunity to enjoy autonomous and engaging careers may have little in the way of superannuation and financial assets. Waiting until age 67 or 70 for the age pension, with limited employment opportunities and below subsistence unemployment benefits, is not a satisfactory situation. Similar arguments could be applied to manual workers who physically struggle to continue occupations past age 60.

A more sophisticated approach

A better approach to age pension reform than just increasing the eligibility age for all would be to apply a more sophisticated status and financial means test from say age 60. This could be blended proportionately with a different status and means test applying fully from say age 80. Full pension rates might be different in the age 60 and 80 formulae. This approach could accommodate full inclusion of home value and (non-annuitised) superannuation assets with greater public acceptance. Let’s stop treating people as if they’re all the same when they reach age 70.

Editor’s Note: For additional material on this subject from the Wall Street Journal, 18 April 2014, see ‘The Richer You Are, the Older You’ll Get.’

 

Bruce Gregor is an actuary and demographic researcher at Financial Demographics and established the website www.findem.com.au.

 

RELATED ARTICLES

A brighter view of dependency ratios

Let's ditch the idea of retirement

French fight pension age rise while Aussies work on

banner

Most viewed in recent weeks

Raising the GST to 15%

Treasurer Jim Chalmers aims to tackle tax reform but faces challenges. Previous reviews struggled due to political sensitivities, highlighting the need for comprehensive and politically feasible change.

100 Aussies: seven charts on who earns, pays, and owns

The Labor government is talking up tax reform to lift Australia’s ailing economic growth. Before any changes are made, it’s important to know who pays tax, who owns assets, and how much people have in their super for retirement.

Here's what should replace the $3 million super tax

With Div. 296 looming, is there a smarter way to tax superannuation? This proposes a fairer, income-linked alternative that respects compounding, ensures predictability, and avoids taxing unrealised capital gains. 

9 winning investment strategies

There are many ways to invest in stocks, but some strategies are more effective than others. Here are nine tried and tested investment approaches - choosing one of these can improve your chances of reaching your financial goals.

Chinese steel - building a Sydney Harbour Bridge every 10 minutes

China's steel production, equivalent to building one Sydney Harbour Bridge every 10 minutes, has driven Australia's economic growth. With China's slowdown, what does this mean for Australia's economy and investments?

With markets near record highs, here's what you should do with your portfolio

Markets have weathered geopolitical turmoil, hitting near record highs. Investors face tough decisions on valuations, asset concentration, and strategic portfolio rebalancing for risk control and future returns.

Latest Updates

Retirement

The best way to get rich and retire early

This goes through the different options including shares, property and business ownership and declares a winner, as well as outlining the mindset needed to earn enough to never have to work again.

Shares

Boom, bubble or alarm?

After a stellar 2025 to date for equities, warning signs - from speculative froth to stretched valuations - suggest the market’s calm may be masking deeper fragilities. Strategic rebalancing feels increasingly timely.

Property

A perfect storm for housing affordability in Australia

Everyone has a theory as to why housing in Australia is so expensive. There are a lot of different factors at play, from skewed migration patterns to banking trends and housing's status as a national obsession.

Economy

Which generation had it toughest?

Each generation believes its economic challenges were uniquely tough - but what does the data say? A closer look reveals a more nuanced, complex story behind the generational hardship debate. 

Shares

Is the iPhone nearing its Blackberry moment?

Blackberry clung on to the superiority of keyboards at the beginning of the touchscreen era and paid the ultimate price. Could the rise of agentic AI and a new generation of hardware do something similar to Apple?

Fixed interest

Things may finally be turning for the bond market

The bond market is quietly regaining strength. As rate cuts loom and economic growth moderates, high-quality credit and global fixed income present renewed opportunities for investors seeking income and stability. 

Shares

The wisdom of buying absurdly expensive stocks (or not!)

Companies trading at over 10x revenue now account for over 20% of the MSCI World index, levels not seen since the dotcom bubble. Can these shares create lasting value, or are they destined to unravel?

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.