Unpaid labour of older people drops off with rising pension age

Around six million Australians volunteer over 500 million hours of unpaid labour every year, but the rising retirement age is set to slash the number of volunteer hours older people can donate, warns a Flinders University study.

In retirement, many retirees choose to support their communities by volunteering at non-profit organisations. This unpaid labour contributes to the function and productivity of these groups, while also helping keep older people actively engaged and healthier for it, a new study in the Journal of Economic Behaviour and Organization says.

Data was used from the Household Income and Labour Dynamics in Australia (HILDA) Survey to conclude that raising the Australian Age Pension eligibility age prolongs working lives and has an unintended and undesirable shrinking effect on a valuable volunteer workforce. The value of this unpaid labour is estimated to be worth over $17 billion (Australian Bureau of Statistics 2015).

When people volunteer, this has a positive impact on the volunteering activities of others in their family. Overall the net impact is one of great positivity through community engagement, feeling useful and connected, which is then passed on to family members.

The Age Pension was introduced in Australia in 1908, with the qualifying age at that time being 65 for men and women, though it was soon reduced to age 60 for women to account for traditional activities for women at that time. Eligibility was kept at this rate until 1995, when the eligibility age for women increased progressively to eventually match that of men in 2014. Men and women were now both eligible for the Age Pension at age 65. In July 2017 the upward trend in age began, rising by six months at two-year intervals. In 2023 the Pension Age will be 67.

Read the full paper in the Journal of Economic Behaviour and Organization Retirement and voluntary work provision: Evidence from the Australian Age Pension reform