(Australian Associated Press)

Welfare and seniors groups have welcomed the federal government’s decision to scrap plans to lift the pension age to 70.

But some – including business and industry – feel it’s nothing more than a politically-motivated “vote winner” before the next election and will hurt the budget.

Prime Minister Scott Morrison on Wednesday said he won’t pursue the change, which the Liberal Party has been arguing for for years.

The Combined Pensioners and Superannuants Association said the move made sense and means that many of the 100,000 people over 50 who are on the Newstart allowance won’t have to wait an extra three years for the age pension.

“CPSA is very pleased that sustained campaigning against the pension-age-to-70 policy has paid off,” the not-for-profit group’s Paul Versteege said in a statement.

The proposal to incrementally increase the qualifying age for the pension to 70 by 2035 had caused anxiety for many people, Council on the Ageing chief executive Ian Yates said.

The focus instead needed to be on removing barriers and increasing job opportunities for older Australians.

“It was the people who wanted to work, or who needed to work but knew it would be difficult to get a job that this caused anxiety for,” he told AAP.

“It’s much better placed for government to be supporting those people staying in work or getting back to work than increasing the pension age.”

The Australian Council of Social Service said it, too, was pleased the government has reversed its position but repeated its call to increase Newstart.

However National Seniors Australia described it as “clearly a vote winner”.

Chief advocate Ian Henschke said the entire pension system – not just eligibility based on age – needed to be reviewed by an independent tribunal.

“The pension should not be a political football that gets played every time an election comes around,” he told AAP.

“We should be discussing more than just the pension age.”

The Australian Chamber of Commerce and Industry agrees, saying wholesale reform of the government’s tax and spend decisions was needed and not “one-off announcements”.

“We need to recognise that a decision not to increase the pension age will have an impact on the budget,” chief executive James Pearson told AAP.

He noted that the proportion of people over 65 who are working has doubled over the past 20 years, saving the government money on welfare payments.