Australia's retirement income system ranks top two in the world
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14 October 2009
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The inaugural Melbourne Mercer Global Pension Index, comparing private and public retirement income systems around the world, has ranked Australia’s system second behind the Netherlands.
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The pension index examined and contrasted 11 systems around the Americas, Europe and Asia-Pacific, and ranked them based on adequacy, sustainability and integrity.
The Netherlands obtained top ranking with a score of 76.1 out of a maximum of 100, followed by Australia (74.0), Sweden (73.5) and Canada (73.2). No country’s system achieved an A-grade classification with an index value above 80, indicating the challenges faced by governments to manage the problems presented by ageing populations.
Professor Deborah Ralston, Director of the Melbourne Centre for Financial Studies claims that, given the growing concern of ageing populations around the world, this index can provide useful insights into how different governments are coping with the related economic and social issues.
Australia scored well in the sustainability and integrity categories (second placed in both). Dr David Knox, Worldwide Partner in Mercer’s Retirement, Risk and Finance, recommends a review of the contribution rates in order to further improve the retirement income system.
An increase in the mandatory superannuation contribution rate and a constant monitoring of pension age as life expectancy increases will ensure that the system will become “sound and robust” and achieve an A-grade classification in the next review.
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