Dismantling begins on barriers for older workers

THE retirement age for judges and the military could be lifted under a suite of proposals designed to keep Australians working - and paying taxes - longer. And the ubiquitous op shop lady could in future be classified as a "worker", rather than a volunteer, so that she would be entitled to workers' compensation if she slipped over in the store.

By InvestSMART · 3 Oct 2012

By InvestSMART ·
3 Oct 2012

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THE retirement age for judges and the military could be lifted under a suite of proposals designed to keep Australians working and paying taxes longer.

And the ubiquitous op shop lady could in future be classified as a "worker", rather than a volunteer, so that she would be entitled to workers' compensation if she slipped over in the store.

The proposals are among a series suggested in a discussion paper released yesterday by the Australian Law Reform Commission for comment.

Age Discrimination Commissioner Susan Ryan said volunteers not being covered by workers' compensation entitlements hit small or non-profit organisations hardest. Those organisations often relied on older volunteers to exist.

"With the insurance required, it's often either too difficult or too expensive to get volunteers, and some organisations that rely on volunteers say they can't get them because they can't pay for them."

The federal government commissioned the discussion paper, saying urgent work needs to be done to remove Commonwealth barriers to older people finding work, and staying in the workforce.

It expects that by 2044-45 one in four Australians will be aged 65 or older a rapid rise from the 14 per cent reported in the 2011 census. It instructed the commission to find ways to keep ageing Australians in the workforce, and off the age pension.

The commission suggested forcing employers to give workers aged 45 and older four weeks' notice if their work was being terminated, up from one week in some cases.

And it said the government should consider reviewing the mandatory retirement age for the judiciary and military. At present the compulsory retirement age for Australian Defence Force personnel is 60 years and 65 years for reservists.

Judges are forced to retire at 70. Ms Ryan who served as a part-time commissioner on the panel said changing this could be difficult, as the retirement age was written into the constitution.

She said discrimination remained built into superannuation law, which does not allow workers aged 75 and older to voluntarily top up their super, nor their employers to gain tax benefits from contributing more than the mandatory amount.

"It's government policy to encourage them to do so [work], so we would say removing that disadvantage would be a priority."

Council on the Ageing national policy manager Jo Root said the proposals were "in the right direction", particularly those designed to remove impediments to older people planning their financial security.

"It's a source of great concern for many people and I think the recommendations on superannuation would help much of this."

The commission is seeking submissions on the discussion paper by November 23, and will report to the government by March 31, 2013.

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Frequently Asked Questions about this Article…

What proposals did the Australian Law Reform Commission put forward to keep older Australians working longer?

The discussion paper suggests a range of measures to remove Commonwealth barriers to older workers, including reviewing mandatory retirement ages (for example for judges and some military personnel), classifying some long-serving volunteers as workers so they can access workers' compensation, extending notice requirements so employers give workers aged 45 and over up to four weeks' notice of termination in some cases, and changing superannuation rules that disadvantage older contributors.

Could the mandatory retirement age for judges and military personnel be changed under the proposals?

Yes — the paper recommends the government consider reviewing mandatory retirement ages. Currently the Australian Defence Force has compulsory retirement ages (60 for some personnel and 65 for reservists) and judges are forced to retire at 70; the commission suggests these rules be examined, although changing the judicial retirement age may be difficult because it is written into the constitution.

Will volunteers be covered by workers' compensation under the suggested reforms?

The discussion paper proposes that some people currently classified as volunteers could be treated as workers, which would make them eligible for workers' compensation if injured. The paper notes small and non‑profit organisations often rely on older volunteers and can struggle to afford insurance coverage.

How do current superannuation rules affect people aged 75 and older, and what change is being suggested?

At present superannuation law does not allow workers aged 75 and over to voluntarily top up their super, nor does it permit employers to receive tax benefits for contributing beyond mandatory amounts for those older workers. The commission recommends removing that disadvantage so older people who want to keep working can boost their super and employers can support that.

What notice-period change is being proposed for employees aged 45 and over facing termination?

The commission suggests employers be required to give workers aged 45 and older four weeks' notice if their employment is being terminated, which in some cases would increase the current one‑week minimum notice period.

Why are these proposals being considered — what demographic trends are driving the review?

The federal government asked for the review because Australia’s population is ageing: the commission cites a projection that by 2044–45 about one in four Australians will be aged 65 or older, up from 14% reported in the 2011 census. The aim is to help keep ageing Australians employed and reduce reliance on the age pension.

How might these proposed changes affect everyday investors and retirement planning?

If implemented, the reforms could let people work longer, change the timing of retirement for many, and alter superannuation contribution opportunities for older workers. That means individual retirement timelines, super strategies and expectations about when someone might draw an age pension could shift — everyday investors may want to reassess retirement plans and super contribution approaches if the rules change.

What is the consultation timeline for the discussion paper and when will the commission report back?

The commission called for submissions on the discussion paper by November 23, and said it would report to the government by March 31, 2013, as part of the formal consultation and reporting process described in the paper.