Workers may be unwilling to pay pensions

Australians will soon have to pay almost as much for the retirements of others as their own.

A new report into the age pension has called for the payment to be drastically restricted because of its rising costs.

By 2054, workers will stump up around $9400 for everyone else's pensions and $11,895 for their own, the Centre for Independent Studies report says.

That's because the number of retirees is expected to balloon compared to the number of workers set to support them.

Each successive generation is asking more from the next than what they were willing to contribute to past generations, the report said.

The imbalance could make taxpayers increasingly unwilling to pay.

"The willingness of workers to continue to pay an ever-increasing share of their income to those in retirement must be questioned," researcher Simon Cowan said.

The libertarian think tank has proposed the government "restore the balance" on the pension and add six months to the retirement age every four years.

It also wants the family home means tested and included for eligibility for the payment.

The superannuation preservation age should be no more than five years before pension age, or much closer, the centre said.

And there should also be restrictions on early superannuation withdrawals to encourage more people into work.

HOW THE PENSION HAS CHANGED:

* Percentage of pensioners up from around 30 per cent in 1911 to 75 per cent in 2011.

* Rate of pension risen - from $3000 a year in 1911 to more than $20,000 (in 2012 dollars) in real terms.

* Pension costs as percentage of wages are at highest level ever, nearly doubling in past 40 years.

* Eligibility more generous: upper limit of assets was just under 12 times full rate of pension in 1911; today single homeowner assets test cut-off is nearly 35 times the full rate.

SOURCE: CIS