The hidden cost of delayed retirement: Pension age, grandparental childcare, and Australia’s fertility dilemma

BY WEALTH ADVISER

Introduction: Australia’s Demographic Crossroads

Australia stands at a pivotal demographic juncture. As the government incrementally raised the Age Pension eligibility age from 65 to 67-a transition completed in July 2023- there is growing debate about the broader social consequences of such reforms. While the stated rationale is to ensure fiscal sustainability and encourage workforce participation among older Australians, emerging evidence suggests that these changes may have unintended effects on family formation and national fertility rates. In particular, the role of grandparents as informal childcare providers is coming under scrutiny, with research indicating that their availability may be crucial for younger generations contemplating having more children.

Pension Age Policy: Intentions and Unintended Consequences

The Australian government’s decision to increase the Age Pension age was primarily motivated by concerns about an ageing population, workforce shortages, and the long-term sustainability of the pension system. The policy encourages older Australians to remain in the workforce for longer, thereby reducing the period over which they draw on public funds.

However, as highlighted by Have a Go News, this policy shift may be contributing to a decline in Australia’s birth rate, which has fallen to its lowest level since World War I. The article notes, “Raising the pension age means that many grandparents are still working and are less available to provide childcare for their grandchildren,” a factor that can significantly affect the ability of younger families to balance work and childrearing responsibilities.

Firstlinks echoes these concerns, suggesting that pension rules and superannuation policies are increasingly influencing not just retirement planning but also intergenerational family dynamics and fertility decisions. The article posits that “when grandparents are less available to help with childcare, younger couples may delay or forgo having additional children due to the high cost and limited availability of formal childcare”.

This phenomenon is not unique to Australia. OECD countries that have raised pension ages often see similar trends, with delayed retirement reducing the capacity of older adults to support their children’s families, both financially and through direct care. Academic research supports this, showing that intergenerational support is a key determinant of fertility intentions in developed societies.

Environmental Toxins: A Decades-Long Driver of Fertility Decline

While pension reforms and pandemic-era policies have influenced recent fertility trends, they exacerbate a far older and more systemic crisis: the cumulative impact of environmental toxins on reproductive health. Over the past 50 years, endocrine-disrupting chemicals (EDCs) such as bisphenol A (BPA), phthalates, per- and polyfluoroalkyl substances (PFAS), and organochlorine pesticides have been linked to a 1-2% annual decline in global fertility rates. These toxins interfere with hormone regulation, damage reproductive organs, and impair fetal viability, with studies showing that even low-level exposure can reduce ovarian reserve in women and sperm quality in men by up to 40%. For example, PFAS-found in nonstick cookware and waterproof textiles-are associated with a 30-40% reduction in clinical pregnancy rates, while air pollutants like PM10 increase miscarriage risk by 160%. Unlike policy-driven shifts, this decline is irreversible for individuals and spans generations, as toxin exposure alters genetic expression and epigenetic markers in gametes.

Pension reforms and pandemic interventions have intensified this preexisting crisis. While delayed retirement reduces grandparental childcare availability-a key support system for young families-environmental toxins compound the problem by weakening reproductive capacity itself. For instance, women exposed to high pesticide levels face a 26% lower probability of live birth per cycle, and men in industrial areas exhibit 30% higher rates of sperm DNA fragmentation. The pandemic exacerbated these trends through increased stress and isolation during lockdowns, while economic uncertainty and healthcare disruptions further delayed family planning. Crucially, toxin-related fertility damage is not easily offset by policy adjustments: unlike childcare availability, diminished ovarian reserve or sperm quality cannot be restored through fiscal incentives or flexible work arrangements.

Addressing fertility decline requires confronting both immediate policy trade-offs and systemic environmental threats. While pension reforms aim to balance fiscal sustainability and workforce participation, their impact pales beside the silent crisis of toxin accumulation. A 2024 European Society of Human Reproduction and Embryology report warns that EDCs alone could push global fertility rates below 1.0 by 2070-a trajectory no pension policy can mitigate. Solutions demand a dual approach: revising retirement policies to support intergenerational caregiving while regulating industrial pollutants and funding detoxification programs. Without tackling environmental root causes, even the most family-friendly pension reforms will struggle to reverse a fertility crisis decades in the making.

Grandparental Childcare: The Missing Link in Fertility Decisions

The impact of grandparental involvement on fertility intentions is well documented in demographic research. A seminal study published in Demographic Research examined four European countries-France, Norway, Bulgaria, and Lithuania-and found that both emotional support and childcare help from grandparents were associated with increased intentions among mothers to have a second or third child, especially in wealthier countries and financially secure households.

Key findings include:

• “Mothers who received grandparental child care help were more likely to say they intended to have another child in France and Norway”.

• “Mothers who received emotional support from grandparents were more likely to say they intended to have another child in France, Norway, and Bulgaria”.

• The effect was strongest in financially secure households, suggesting that grandparental support provides the “extra push” needed for families already considering more children.

The study further highlights that the availability of grandparental support is not uniform. Maternal grandparents, particularly grandmothers, tend to be the most active supporters, but grandfathers are increasingly important, especially as gender roles evolve1. The overlap between emotional support and practical childcare is significant: “Grandparents who offer emotional support may signal to parents that they are willing to provide child care or other forms of help as needed, such as financial assistance. In this case, the involvement of grandparents may represent a kind of ‘insurance’ for parents concerned about whether they have sufficient resources to support their children”.

In Australia, where formal childcare is expensive and often difficult to access, the withdrawal of grandparental support due to delayed retirement can represent a substantial barrier to family growth. As Have a Go News observes, “If grandparents are not available to help, many parents may decide that having another child is simply too hard or too expensive”.

International Perspectives and Australian Realities

Comparing Australia’s situation with European countries provides valuable context. The Demographic Research study found that the positive association between grandparental support and fertility intentions was most pronounced in France and Norway-countries with generous public childcare and family benefits1. In contrast, Bulgaria and Lithuania, with less public support and lower household wealth, showed weaker or even negative associations.

This suggests that the impact of grandparental involvement is context-dependent. In environments where the state provides robust family support, grandparents supplement these services, enhancing family resilience and enabling higher fertility. Where public support is lacking, families may be more reliant on grandparents, but if those grandparents are unavailable-due to work or health-fertility intentions may stagnate or decline.

Australia, with its high cost of childcare and patchy support for working parents, appears closer to the latter scenario. As Firstlinks notes, “The intersection of pension policy, superannuation, and family support is becoming a critical issue for wealth advisers and policymakers alike”. The implication is clear: policies that extend working life for older Australians may inadvertently undermine the very demographic sustainability they seek to protect by discouraging family growth.

Policy Implications and Wealth Management Strategies for Advisers

Philosophical and Practical Insights

The intersection of pension policy, family support, and fertility raises profound questions about how societies balance economic resilience with demographic sustainability. For financial advisers, this means adopting a holistic approach that considers not only individual wealth accumulation but also the broader context of intergenerational support and family wellbeing.

Actionable Advice for Advisers and Families:

• Plan for Intergenerational Support: Encourage clients to consider how their retirement timing and financial decisions may affect their children’s ability to raise families. Where possible, structure wealth management strategies to allow for flexible retirement and the capacity to assist with childcare.

• Explore Flexible Work Arrangements: Both older and younger family members may benefit from part-time work, job sharing, or phased retirement, enabling grandparents to remain engaged in the workforce while still providing support to their families.

• Leverage Superannuation and Pension Planning: Use superannuation products and pension planning to build in options for early or flexible retirement, recognising the value of grandparental involvement in family life.

Policy Directions:

• Integrate Family-Friendly Pension Reforms: Policymakers should consider the broader social impact of pension age increases. Options include allowing more flexible retirement for those with caregiving responsibilities or providing tax incentives for grandparents who assist with childcare.

• Incentivise Grandparental Involvement: Recognise and support the role of grandparents in family wellbeing through targeted subsidies, caregiver credits, or direct payments for informal childcare.

• Support Working Parents: Expand access to affordable, high-quality childcare and parental leave, reducing the reliance on grandparents where necessary but also enabling intergenerational cooperation where possible.

Conclusion

Australia’s challenge is to design policies that support both economic resilience and family growth. As the evidence shows, grandparental involvement is a critical-if often overlooked-factor in fertility decisions. Pension reforms that delay retirement may inadvertently reduce the availability of this support, contributing to lower birth rates and a less resilient society. For wealth advisers, families, and policymakers, the message is clear: a holistic, intergenerational approach is needed to navigate the demographic crossroads ahead.

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References

1. Tanskanen, A. O., & Rotkirch, A. (2014). The impact of grandparental investment on mothers’ fertility intentions in four European countries. Demographic Research, 31(1), 1–26. [fertility.pdf]

2. “Raising pension age lowers Australia’s birth rate.” Have a Go News. Accessed May 2025.

3. “Pension age increase may lead to lower birth rate.” Aged Care Guide. Accessed May 2025.

4. “Are pension rules impacting fertility?” Firstlinks. Accessed May 2025.

5. OECD (2010). OECD Family Database. Paris: Organisation for Economic Co-operation and Development.

6. Coall, D. A., & Hertwig, R. (2010). Grandparental investment: Past, present, and future. Behavioral and Brain Sciences, 33(1), 1–59.

7. Kaptijn, R., Thomese, F., van Tilburg, T. G., & Liefbroer, A. C. (2010). How grandparents matter: Support for the cooperative breeding hypothesis in a contemporary Dutch population. Human Nature, 21(4), 393–405.

8. Aassve, A., Meroni, E., & Pronzato, C. (2012). Grandparenting and Childbearing in the Extended Family. European Journal of Population, 28(4), 499–518.

9. StatPearls. (2025). Environmental Toxins and Infertility. NCBI Bookshelf. https://www.ncbi.nlm.nih.gov/books/NBK576379/

10. Manickam, P. (2025, January 31). Environmental Toxins and Fertility: A Hidden Threat to Reproductive Health. https://drpalam.com.au/artificial-intelligence/environmental-toxins-and-fertility-a-hiddenthreat-to-reproductive-health/

11. Zhang, Y., et al. (2024, December 12). Endocrine Disruptor Chemicals Exposure and Female Fertility Declining. Frontiers in Public Health. https://www.frontiersin.org/journals/public-health/articles/10.3389/fpubh.2024.1466967/full 12. Christianson, A. (2018). Environmental Toxins and Infertility. PMC. https://pmc.ncbi.nlm.nih.gov/articles/PMC6396757/

13. Liu, Y., et al. (2023, August 4). Fertility Loss: Negative Effects of Environmental Toxicants on Oogenesis. Frontiers in Physiology. https://www.frontiersin.org/journals/physiology/articles/10.3389/fphys.2023.1219045/full

14. Sobotka, T., et al. (2024, January 22). Fertility Declines Near the End of the COVID-19 Pandemic. Frontiers in Public Health. https://pmc. ncbi.nlm.nih.gov/articles/PMC10803721/

All web references accessed and current as of May 2025.