Voluntary, non-penalised deferral of the old age pension is key to Australia's longevity crisis, according to PricewaterhouseCoopers partner Catherine Nance.
"If the old age pension could be deferred and voluntarily back-ended, then there would be an incentive to live off savings and work longer because they [Australians] would not lose the age pension," Nance said.
The United Kingdom, United States and some European countries have various systems of larger pensions on deferral beyond specified ages.
Nance gave the example of a mature worker who chose to retire at 70 instead of 65. If that person would have received $20,000 a year from the ages of 65 to 70 but they deferred, then their pension from age 71 on would be $25,000 a year.
The system would be "cost-neutral" in terms of revenue, because the person would continue to pay tax, she said.
"Retirees and product cope better with a known period of time - front end," she said.
"Government copes better with the long longevity risk - back end."
On the question of annuities, Nance criticised the inflexibility which did not allow for changes in people's lives.
The counterparty risk of annuities from private providers could be addressed by a federal government unfunded national levy scheme, similar to that outlined in section 23a of the Superannuation Industry (Supervision) Act, which levied superannuation funds if a fund could not meet its obligations.
