The Mercer CFA Institute Global Pension Index ranked Australia’s superannuation system sixth for the second year in a row. This is the highest ranking among Asia-Pacific countries and shows how strong and stable the country’s $3.4 trillion retirement savings pool is.
Australia got a B+ for being enough, being sustainable, and being honest. Adequacy looks at the system as a whole and measures the level of benefits from both the public pension and private superannuation. Sustainability looks at how long these benefits will last and how well the system is run. Integrity looks at how well the system is run.
Dr. David Knox, a senior partner at Mercer and the study’s lead author, said that even though Australia’s superannuation system did well, super funds need to do more to help their members have a better retirement.
Knox said, “We’ve done well by building up our assets through mandatory superannuation. Now we need to focus on our retirement income. “
Australia ranked 6th in Mercer CFA Institute Global Pension Index:
“The retirement income covenant law was passed in February of this year, and as of July 1, super funds had to come up with a plan and publish it. That’s a good start, but it’s just the first step.
Knox said that the government should require funds to show projections for retirement income on the annual statement for each member.
“That would be a very helpful change because instead of focusing on how much we have, we should focus on how much we will make in the future,” he said.
“It’s time to change the way things are looked at, talked about, and even said so that retirees can start spending with confidence.”
The Mercer-CFAI Institute Global Pension Index is an in-depth look at the world’s pension systems, which cover almost two-thirds of the world’s population, or about 65%. It compares 44 retirement income systems around the world, pointing out their strengths and weaknesses and making suggestions for how they could be changed to provide better and more stable retirement benefits.
For the second year in a row, Iceland, the Netherlands, and Denmark topped the index overall. Their pension systems are well-run and sustainable, so they all got an A.
As a percentage of the average wage, the minimum age pensions in all three countries are very high. “Both pillars are working well; they have a good minimum pension, and most people are in private pension plans,” Knox said.
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