Tony Abbott puts pension age of 70 on the table

The Abbott government is actively considering raising the pension age to 70 and changing indexation arrangements for the payments in the budget.

This comes as Labor, seniors groups and unions have accused Prime Minister Tony Abbott of preparing to break a pre-election promise that there would be no cuts or changes to pensions.

In a speech in Washington DC this week, Treasurer Joe Hockey stressed the need for the federal budget to be sustainable and noted that the number of Australians aged 65 to 84 will double between 2010 and 2050, while the number of people aged over 85 will quadruple.

Mr Hockey also said that access to the pension system needed to be ''prioritised for the most vulnerable'', adding that ''over the next decade, spending on our age pension is projected to increase by around 70 per cent in today's dollars''. 

In the speech, he stopped short of nominating a rise in pension age to 70, but it is understood a rise to 70 is a ''live option'', as is a move to change the indexation rate of the pension.

A government source stressed a final decision on both or either measure is weeks away.

There are several meetings of the high-powered cabinet expenditure review committee still to come.

Labor introduced changes in 2009 that will see the pension age rise from 65 to 67 between 2017 and 2023.

If the Abbott government decides to further raise the pension age, it would be staggered over half a decade or more.

There are currently 1.427 million Australians on the full age pension and 943,000 on a partial pension.

Labor's families and payments spokeswoman Jenny Macklin seized on Mr Hockey's statements, saying they represented a ''complete breaking'' of the promise Mr Abbott made to age pensioners before the federal election.

The ACTU and seniors groups also called on the government to stand by its promise on pensions. National Seniors Australia chief executive Michael O'Neill accused Mr Hockey of ''demonising'' older Australians.

Phil Tuck, a 60-year-old construction worker at Port Fairy in Victoria said he was ''hanging out for retirement''.

''We work outside in the elements in all conditions. Our bodies don't hold up till we are 70,'' he said. ''It's okay if you work in an air-conditioned office … We see back problems, concretor's arms and legs and necks.''

CFMEU national secretary Dave Noonan says many workers in construction, mining and forestry find it difficult if not impossible to get employment after the age of 50.

''If this happens, many will retire into poverty because they won't have sufficient superannuation and won't have access to the age pension,'' he said.

Mr Hockey's Washington speech was the first of three major speeches he will give before the budget, with the next one tipped to focus on the rising cost of health care in Australia.

smh.com.au, with Matthew Knott and Judith Ireland

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