Over the years, reform to the age pension has been a political hot potato.

But at more than $40 billion a year - forecast to grow at 6 per cent per annum - and with government finances stretched, the pension has become too big to ignore.

"What we see under the current policy settings is that by 2055 the average worker might be expected to contribute more to other people's pensions than they would be expected to contribute to their own retirement," said Simon Cowan, research fellow at the Centre for Independent Studies.

A new report from the CIS has found the cost of the pension per worker has doubled since 1970, and the full rate of the pension is now seven times what it originally was - thanks in large part to more generous policy changes.

"Each generation is demanding the next generation pay more for their retirement than those workers were willing to pay the generation before," Mr Cowan said.

The report also found that:

25 per cent of pensioners are among the wealthiest 40 per cent of Australians;

25 per cent of pensioners are among the wealthiest 40 per cent of Australians; Two-thirds of retirees leave the workforce early — and a third of those voluntarily; and

Two-thirds of retirees leave the workforce early — and a third of those voluntarily; and 40 per cent of workers have no superannuation savings left when they reach the pension age.

The CIS report recommends that the family home be included in the pension assets test - as well as lifting the age at which the pension can be accessed in line with rising life expectancy.

The CIS estimates its reforms could save $15 billion a year.

However, the CEO of National Seniors, Michael O'Neill, has warned against wholesale changes to the system.

"As they're approaching or in retirement, (seniors) need to understand there's financial certainty there, that the rules won't be changed to such a substantial extent that the plans they made can be thrown out at the whim of some budgetary demand," Mr O'Neill said.

The chairman of the Productivity Commission, Peter Harris, recently argued that the family home should be included in the pension means test.

However, both the Coalition and Labor Party have emphatically ruled the idea off-limits.

Mr O'Neill said aside from the emotional stress it would cause, there still is not a mature and trusted reverse mortgage market in Australia.

"And that's very much about fear of a complex product at that time in people's lives," Mr O'Neill said.

"Remembering one error with a reverse mortgage or whatever product in your 70s or 80s - there's no recovery from that, hence people are very cautious."

He also argued the pension age should not be lifted until the problem of mature age unemployment is fixed.

"The very stark statistic that underlines this is that if you lose your job at age 55, you'll be out of work on average in this country for 72 weeks. The likelihood is you won't get another job," Mr O'Neill said.

However, Simon Cowan said there is a fundamental issue of inter-generational equity that needs to be addressed.

"We really need to make sure everyone is given a fair go - not that people who are locked out of the housing market who are struggling to get by in work are having their incomes transferred to people with substantial asset holdings in retirement," he responded.