The Unequal Burden of Retirement Reform: Evidence from Australia

As governments try to contain rising expenditure on retirement pensions by increasing eligibility ages, there are concerns that such reforms disproportionately affect poorer households. Using detailed longitudinal data, I examine this trade-off in the context of an Australian reform that increased women’s pension-eligibility age from 60 to 65. While this reform led to significant reductions in net government expenditure, the negative effects on household incomes were concentrated among poorer households. These unequal impacts meant that, among affected cohorts, the reform increased relative poverty rates by 20 to 37 percent and inequality measures by 11 to 36 percent.