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
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Retirement reimagined as Australian optimism meets inflation worries in 2023 super fund insights
The latest reports on retirement confidence among Australians present a spectrum of sentiments, with fresh data revealing surprising optimism in some quarters while exposing underlying concerns in ...Read more
Superannuation
Aussie retirees face a shortfall as ideal retirement nest egg doubles what super will deliver
As Australians look towards retirement, the desired superannuation balance that many believe will ensure a comfortable retirement has significantly outpaced what they are on track to actually save. Read more
Superannuation
Super funds eye 6.5% return in 2023, despite a rocky start
As the year draws closer to its climax, Chant West unveils its projection for super funds in what can only be described as a year of economic ebbs and flows. Read more
Superannuation
A deep dive into Australia’s superannuation system
Australia has a robust retirement savings system known as superannuation designed to provide financial security to Australians in their post-work years. Read more
Superannuation
50,000 super fund members impacted by data breach
Around 50,000 member records were impacted by the breach that took place earlier this month. Read more
Superannuation
Two super funds tipped to reach $1tn by 2040
KPMG has released the findings from a new review. Read more
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Retirement reimagined as Australian optimism meets inflation worries in 2023 super fund insights
The latest reports on retirement confidence among Australians present a spectrum of sentiments, with fresh data revealing surprising optimism in some quarters while exposing underlying concerns in ...Read more
Superannuation
Aussie retirees face a shortfall as ideal retirement nest egg doubles what super will deliver
As Australians look towards retirement, the desired superannuation balance that many believe will ensure a comfortable retirement has significantly outpaced what they are on track to actually save. Read more
Superannuation
Super funds eye 6.5% return in 2023, despite a rocky start
As the year draws closer to its climax, Chant West unveils its projection for super funds in what can only be described as a year of economic ebbs and flows. Read more
Superannuation
A deep dive into Australia’s superannuation system
Australia has a robust retirement savings system known as superannuation designed to provide financial security to Australians in their post-work years. Read more
Superannuation
50,000 super fund members impacted by data breach
Around 50,000 member records were impacted by the breach that took place earlier this month. Read more
Superannuation
Two super funds tipped to reach $1tn by 2040
KPMG has released the findings from a new review. Read more