The unequal burden of retirement reform: Evidence from Australia

Abstract

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 significantly reduced government spending on women at affected ages, the negative effects on household incomes were concentrated among poorer households. These unequal impacts meant that the reform temporarily increased relative poverty rates among affected women by around four percentage points and inequality measures by 6% to 19%.