Retirement
Australian super’s 3rd place ranking leaves room for improvement
While Australia’s superannuation system has ranked third worldwide in a new report, industry experts are advocating for a number of improvements they say are necessary to move up to an “A-grade system”.
Australian super’s 3rd place ranking leaves room for improvement
While Australia’s superannuation system has ranked third worldwide in a new report, industry experts are advocating for a number of improvements they say are necessary to move up to an “A-grade system”.

According to the 2019 Melbourne Mercer Global Pension Index, Australia’s super system is rated a B+.
It scored 75.3 on the index rating, behind only the Netherlands and Denmark, which both scored above 80.
The report highlighted Australia’s high levels of household debt as a key challenge holding back our superannuation system, which saw a need for additional funds being required to pay off debt in retirement.
The report’s author, Dr David Knox, said that “as the OECD notes, one needs to look at the assets available to pay down debt. In particular, where future pension liabilities are already funded, this will increase households’ assets.”

The report noted that the levels of household debts vary greatly country to country, with Argentina’s debt level being 7 per cent of GDP, while Australia currently has 129 per cent of its GDP in debt.
Countries with household debt of 130 per cent of GDP or higher scored a zero on this element of the index, the report outlined.
Despite high debt levels, it said that overall, Australia’s superannuation system has a sound structure with many good features but has areas for improvement that differentiate it from an A-grade system.
To improve into an A-grade system, Mercer outlined five main areas in which Australia’s superannuation system needs to be overhauled:
- Moderating the asset test on the means-tested age pension to increase the net replacement rate for average income earners
- Raising the level of household saving and reducing the level of household debt
- Introducing a requirement that part of the benefit must be taken as an income stream
- Increasing the labour force participation rate at older ages as life expectancies rise
- Introducing a mechanism to increase the pension age as life expectancy continues to rise.
The report comes off the back of a strong September for Australia’s growth focused super funds.
About the author

About the author


Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more

Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more

Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more

Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more

Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more

Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more

Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more

Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more

Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more

Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more

Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more

Superannuation
SuperAPI co-founder criticises Labor's superannuation tax as 'sneaky tax on young people'
The co-founder of SuperAPI has labelled Labor's proposed tax on superannuation balances above $3 million as a "sneaky tax on young people, tomorrow" disguised as a policy targeting wealthy retirees ...Read more

Superannuation
Election policies could reshape Australia's superannuation landscape, expert warns
Competing superannuation policies from Australia's major political parties could have significant implications for investors and retirees, according to a financial expert. Read more

Superannuation
Industry leaders weigh in on concessional super tax as Budget confirms $55bn investment
Changes to the taxation of superannuation earnings and contributions have drawn mixed responses from financial and payroll sector leaders, as the Federal Budget confirms over $55 billion in ...Read more

Superannuation
Call for indexation on super tax cap as $3m threshold draws criticism
A senior executive in the superannuation technology sector has criticised the Federal Government for failing to index the proposed $3 million superannuation tax cap, arguing the measure will unfairly ...Read more

Superannuation
Rest members back calls for fairer superannuation rules ahead of Federal Budget
Rest has called on the Federal Government to implement superannuation reforms aimed at improving fairness across the system, after member survey results showed strong support for a range of proposed ...Read more