The Association of Superannuation Funds of Australia (ASFA) has warned policy makers to consider various issues before increasing the qualifying age for the pension to 70.
It comes as the productivity commission made the suggestion in view of Australia's burgeoning ageing population.
ASFA chief executive officer Pauline Vamos said that while she understood the economic pressures of an increasing ageing population, social and health-related factors must be considered before making any changes.
"Many people reaching their late 60s and early 70s are either unable to work at all, or can no longer perform the roles they have been working in, due to physical or mental health-related concerns," she said.
"While retaining these workers is good in theory, the reality is a lack of jobs for older workers would most likely see many individuals in this age group forced to apply for the Newstart allowance in order to survive."
She also said the age increase could push people in their late 60s onto the disability pension — and policy makers should consider the cost of this.
ASFA suggested that measures that could be applied to reduce individuals' reliance on the age pensions included continuing to provide tax concessions for superannuation contributions and being flexible on contribution caps to allow people, especially women, to catch up on their retirement savings when they can.
It also suggested providing training and support for older workers and encouraging employers to hire older workers.
"Such policies have the potential to boost retirement savings, which will help governments now and in the future when it comes to ensuring all Australians have an adequate income to live a comfortable retirement," Vamos said.
Australia's population is set to hit 38 million by 2060, with those aged 75 years or more expected to rise by four million by then. This is an increase from about 6.4 per cent to 14.4 per cent of the population.
"In 2012, there was roughly one person aged 100 years old or more to every 100 babies. By 2060, it is projected there will be around 25 such centenarians," the productivity commission said.
