Increasing the pension age to 70 by 2035 and a higher-threshold single asset test for eligibility for the age pension are further National Commission of Audit recommendations the government has seized on to help it meet the cost of an ageing population.

Projected population aged 65 years and over, Australia

Projected population, Median age, Australia

Source: Population Projections, Australia, 2012 (base) to 2101 (ABS cat no. 3222.0) Note: Series A, B and C vary due to differing assumptions made about future fertility and mortality rates, and net overseas and interstate migration made by the ABS. A detailed explanation can be found here.

Norton Rose Fulbright partner Zein El Hassan said that "while the proposed changes to the age pension provides economic relief in theory, the real economic benefits will only truly be realised, if the changes encourage more and more Australians to be self-funded in retirement".

He also says that the proposed changes "could potentially have an adverse impact on the behaviour of those approaching retirement due to the uncertainty the proposed changes inevitably create in their preparation for retirement."

However, Mr El Hassan considers that "the increase in the pension age means an opportunity for the financial services industry to develop products and tailor their services to help those approaching retirement better prepare for the uncertain future. Financial advisers, in particular, will have greater opportunities to help their clients better prepare for their retirement in relation to changes impacting the age pension eligibility criteria."

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