Australian Treasury Projects Lower Pension Spending by 2066

The Australian Treasury published the 2026 Intergenerational Report, which provides economic and social projections for the country through 2066. The report challenges assumptions that an ageing population will make the age pension unsustainable, projecting that spending on age and service pensions will actually decrease from 2.3 per cent of GDP to 1.8 per cent over the next four decades.

This decline is attributed to the combined effects of means-testing and compulsory superannuation, which the Treasury says will reduce overall reliance on government support. The report predicts that the percentage of older Australians receiving some form of income support will fall to 52 per cent by 2066, compared to 66 per cent last year.

While pension spending is expected to drop, the report warns of other demographic pressures. The number of Australians over the pension age of 67 is projected to nearly double to 9 million by 2066. Specifically, the population of those over age 85 is expected to triple, which the Treasury forecasts will increase pressure on aged care and health services.