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


A brighter view of dependency ratios

Longevity awareness and the three pillars

Making judgments based on age


Most viewed in recent weeks

Welcome to Firstlinks Edition 433 with weekend update

There’s this story about a group of US Air Force generals in World War II who try to figure out ways to protect fighter bombers (and their crew) by examining the location of bullet holes on returning planes. Mapping the location of these holes, the generals quickly come to the conclusion that the areas with the most holes should be prioritised for additional armour.

  • 11 November 2021

Why has Australia slipped down the global super ranks?

Australia appears to be slipping from the pantheon of global superstar pension systems, with a recent report placing us sixth. A review of an earlier report, which had Australia in bronze position, points to some reasons why, and what might need to happen to regain our former glory.

Welcome to Firstlinks Edition 431 with weekend update

House prices have risen at the fastest pace for 33 years, but what actually happened in 1988, and why is 2021 different? Here's a clue: the stockmarket crashed 50% between September and November 1987. Looking ahead, where did house prices head in the following years, 1989 to 1991?

  • 28 October 2021

How to help people with retirement spending decisions

Super funds will soon be required to offer retirement income strategies for members in decumulation. With uncertain returns, uncertain timelines, and different goals, it's possibly “the hardest, nastiest problem in finance".

Tips when taking large withdrawals from super

You want to take a lump sum from your super, but what's the best way? Should it come from you or your spouse, or the pension or accumulation account. There is a welcome flexibility to select the best outcome.

“Trust your instinct” Hamish Douglass in conversation with Sir Frank Lowy AC

Sir Frank shares his story, including his journey from war-torn Europe, identifying opportunities, key character traits necessary for business success, and the importance of remaining paranoid yet optimistic.

Latest Updates

Investment strategies

Charlie Munger and stock picks at the Sohn Conference

The Sohn Australia Conference brings together leading fund managers to chose their highest conviction stock in a 10-minute pitch. Here are their 2021 selections with Charlie Munger's wisdom as the star feature.


John Woods on diversification using asset allocation

All fund managers now claim to take ESG factors into account, but a multi-asset ethical fund will look quite different from a mainstream fund. Faced with low fixed income returns, alternatives have a bigger role.

SMSF strategies

Don't believe the SMSF statistics on investment allocation

The ATO's data on SMSF asset allocation is as much as 27 months out-of-date and categories such as cash and global investments are reported incorrectly. We should question the motives of some who quote the numbers.

Investment strategies

Highlights of reader tips for young investors

In this second part on the reader responses with advice to younger people, we have selected a dozen highlights, but there are so many quality contributions that a full list of comments is also attached.

Investment strategies

Four climate themes offer investors the next big thing

Climate-related companies will experience exponential growth driven by consumer demand and government action. Investors who identify the right companies will benefit from four themes which will last decades.

Investment strategies

Inflation remains transitory due to strong long-term trends

There is momentum to stop calling inflation 'transitory' but this overlooks deep-seated trends. A longer-term view will see companies like ARB, Reece, Macquarie Telecom and CSL more valuable in a decade.


Infrastructure and the road to recovery

Infrastructure assets experienced varying fortunes during the pandemic, from less travel at airports to strong activity in communications. On the road to recovery, what role does infrastructure play in a portfolio?


The three prices that everyone should worry about

Among the myriad of numbers that bombard us every day, three prices matter greatly to the world economy. Recent changes in these prices help to understand the potential for a global recovery and interest rates.



© 2021 Morningstar, Inc. All rights reserved.

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. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). 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.

Website Development by Master Publisher.