Australia’s retirement age has been a topic of discussion for many years. In a recent decision exploring the definition of “retirement age”, a judge has determined that it is the age at which a person qualifies for the pension, rather than when they can access superannuation.
Recent case: Court settles the retirement age question
In Georges v Elders Rural Services Australia Limited [2023] (1 November 2023), Maria Georges filed an application in the Federal Circuit and Family Court of Australia (FCFCA) seeking that her former employer, Elders Rural Services Australia Limited (Elders) pay her a pro rata sum of money for long service leave, under the Long Service Leave Act 1981 (NT) (LSL Act).
Georges was born in August 1962 and moved to Darwin in January 2002 where she began work in the real estate industry. She began employment at Elders in November 2015 and “retired” in March 2023.
On 14 March 2023, Georges gave Elders a letter of resignation, advising that she had decided to retire and requested “payment of 7 plus years long service leave including the additional superannuation benefit attached to this payment plus interest.”
Elders did not pay Georges the pro rata long service leave and Georges submitted a letter to Elders on 27 March 2023 drafted by an industrial relations consultancy which stated that because she had reached the “preservation age” whereby she could obtain her superannuation, she had “retired” and had, therefore, achieved the prerequisite for the payment of pro rata long service leave entitlements. The industrial relations consultancy said that they would take the matter to the Northern Territory Civil and Administrative Tribunal (NTCAT) where they believed they would be successful in attaining a ruling in accordance with their interpretation.
Elders said that they had advice from the Northern Territory public service on the proper interpretation, which was that the age at which a person can retire is when they qualify for the age pension.
Long service leave
The LSL Act sets out the legislative framework for the payment of pro rata long service leave at section 10(2). It reads:
Where an employee whose period of employment is less than 10 years but not less than 7 years ceases to be an employee of that employer, otherwise than by death:
(a) on or subsequent to attaining the age at which he or she may retire;
(b) on the termination of employment by the employer for a reason other than serious misconduct; or
(c) on account of illness, incapacity or domestic or other pressing necessity of such a nature as to justify so ceasing to be an employee,
the employer shall pay to the employee the amount payable under section 11 for a period equal to 1.3 weeks for each completed year of service of that employment.
The question was whether Georges had “attained the age at which she may retire”.
Preservation age versus Retirement age
Georges submitted that she had turned 60 in August 2022 and had worked for over seven continuous years with Elders. Her last day of employment with Elders was Friday, 17 March 2023 whereby she retired from the workforce. She said that she had reached the preservation age because she could access her superannuation and had retired and is living off her superannuation and no longer in the workforce.
She argued that there are two “ages” that are relevant to decide whether she has reached “the age at which she may retire”.
The first is “preservation age”, which is the age a person can access their superannuation. The Australian Taxation Office (ATO) has determined that a person born between 1 July 1962 and 30 June 1963 has a preservation age of 58.
The second is “age pension age” which is the age that a person is entitled to receive Australia’s age pension. As Georges was born after 1 January 1957, the age at which she could access the age pension is when she turns 67.
Superannuation interpretation
In handing down their decision, the Court acknowledged that when the LSL Act commenced in 1981 there was no such thing as superannuation. At the time, retirement age was the age at which a person was eligible for the pension.
In 1981, people generally remained in employment until they received the pension, and most businesses did not employ anyone once they were eligible for the aged person. This changed when compulsory superannuation was introduced. Superannuation allowed people to leave the workforce and be able to support themselves, rather than rely upon government benefits.
Georges preferred the interpretation that someone who is living off their superannuation is now “retired”, and that a person may retire when they have reached the “preservation age”.
The Court noted that this interpretation does not take into account the fact that someone may continue to work or remain in some form of paid employment even when they reach preservation age.
Georges’ claim rejected
Georges stopped working at 60 years old as she had decided that she no longer wanted to remain employed. The Court rejected Georges’ application for the pro rata payment of long service leave on the following grounds:
- When she stopped working, she had not reached the age of 67 and therefore had not attained the age at which she may retire.
- She had not ceased employment due to illness, incapacity or domestic or other pressing necessity of such nature as to justify the cessation of employment.
- Because Georges had not satisfied the above requirements, there was no obligation for Elders to pay her pro rata long service leave.
Key takeaway
It is also important to note that this case was specifically about the entitlement to pro-rata long service leave in the Northern Territory once a person reaches ‘retirement age’. Other states and territories may not contain similar provisions.
The above decision confirms that a person will reach retirement age once they are eligible for the pension, and not merely when they can access their superannuation.
The preservation age is when a person can access their superannuation. Some people may still access their superannuation whilst continuing to work.
The age pension age is when a person can access the pension.
The age pension age can vary depending on when someone is born. Services Australia has information about the age pension including other eligibility rules.
A person can choose to work well past reaching retirement age and preservation age, provided that they are ready, willing and able to and can fulfill the inherent requirements of the job they are employed to perform.