Australia’s $1.6 trillion superannuation system has been ranked as the third best in the world, although it emerged with strong marks around integrity, according to a report looking into the retirement income systems of 20 countries.
Australia was beaten by the retirement savings system in the Netherlands and Denmark, and its super system was described as having a ”sound structure, with many good features, but has some areas for improvement”.
According to the Melbourne Mercer Global Pension Index, Australia’s improved score – of 77.8 points, up from 75.7 in 2012 – was ”primarily caused by the introduction of the Stronger Super reforms leading to improved governance and stronger regulation”.
The Stronger Super reforms included requiring super funds to offer a low-cost, default fund for disengaged members.
The report – completed by financial services firm Mercer and the Australian Centre for Financial Studies – said Australia could boost its score by requiring that part of the retirement benefit must be taken as an income stream.
It also recommended increasing the labour force participation rate among older workers, boosting the pension age as life expectancy increases, aligning superannuation access age with the pension age, and removing legislative barriers to encourage more effective retirement income products.
Mercer senior partner David Knox said the ageing population meant Australians needed to change their attitudes towards retirement and that businesses needed to develop more flexible workplaces to take advantage of older workers’ skills.
The report, funded by the Victorian government, concluded the global shift from defined benefit pension schemes necessitated a focus on provision of retirement income, rather than wealth accumulation.
The UK’s super system was ranked ninth while the US came in at 11.
The original release of this article first appeared on the website of Hangzhou Night Net.