Retirement
Australia ranks 7th for retirement outcomes
Despite the debate around the superannuation guarantee and how superannuation should be used, Australia’s current superannuation model ranks seventh in the world for retirement outcomes, new research has revealed.
Australia ranks 7th for retirement outcomes
Despite the debate around the superannuation guarantee and how superannuation should be used, Australia’s current superannuation model ranks seventh in the world for retirement outcomes, new research has revealed.
Results collated by Natixis Investment Managers show that Australia has come seventh out of 44 countries on factors that drive retirement security.
Australia placed third overall in the finances in retirement sub-index, although the country’s ranking in interest rates (10th) and bank non-performing loans (seventh), indicators of the financial system, fell year-on-year. While Australia’s cash rate remained relatively low at 0.25 per cent, 16 other countries measured had negative rates.
However, one of Australia’s biggest downfalls was its ranking in terms of income and gender pay parity.
Australia fell in the middle of all others for material wellbeing, which captured income equality, income per capita and unemployment (although it had risen from 24th in 2019 to 22nd this year).
Damon Hambly, CEO for Natixis Investment Managers in Australia, commented that local retirees are facing the prospect of living for longer on lower incomes, as the nation battles through a recession.
“Possible solutions may include a higher retirement age, and for retirees to reconsider how they think about retirement – possibly continuing to work into their retirement,” Mr Hambly said.
“The asset management industry also has a role to play in taking the lead on products that will address the long-term needs of individuals and institutions to have a real impact on global retirement security.”
Mercer and AIST research has estimated that people on lower incomes are set to be disproportionately affected by an estimated $100 billion shortfall in savings at retirement as a result of the early release.
Natixis also pointed to Australian female retirees facing a different set of circumstances compared with their male counterparts when it comes to material wellbeing.
Data from the government’s Workplace Gender Equality Agency has shown that women earn on average 20.8 per cent less than men across occupations and sectors. Women also live longer on average and tend to retire earlier, facing greater risk of outliving their assets.
Natixis Investment Managers managing director and head of distribution for Australia and New Zealand, Louise Watson, said it is important for the super and retirement industries to work together to find ways to close the gender wage and retirement gaps.
“Lower wages mean lower super balances, so improving wage equality and general financial literacy is an important step for our industry to take to make sure that women are empowered to take control of their financial future,” Ms Watson said.
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