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How Australia's super system compares globally

Superannuation  |  17/01/2017  |   3 min read

Australia has the third best superannuation system in the world. According to Mercer’s Global Pension Index (MMGPI) we only rank behind Denmark and The Netherlands when it comes to integrity, sustainability and adequacy.

While that’s good news for local retirees, it doesn’t mean much without some sort of context. Which is why we decided to take a closer look at the Mercer numbers, and see how superannuation systems compare around the world.


Mercer Global Pension Index

Global Challenges

Although population numbers, superannuation systems, and demographics vary from country to country, the report found that many of the retirement challenges are universal. Amongst the most common are the need to:  

•    Increase the retirement age to reflect increasing life expectancy and reduce pension costs.

•    Promote higher labour force participation at older ages. This will help reduce the length of retirement and save the pension system money. 

•    Encourage or require higher levels of private saving, both within and beyond the pension system, in order to reduce reliance on the Age Pension.  

•    Entice self-employed individuals to contribute regularly. As it stands, this segment has historically low retirement savings.

•    Reduce leakage from the retirement system and ensure the funds saved, often with associated taxation support, are used for the provision of retirement income.

Australia’s scorecard

You can see individual results across adequacy, sustainability and Integrity in the table below. In this instance adequacy means the system’s ability to ‘provide adequate retirement income’,  sustainability refers to the long term ability to viability of the system when factoring issues like an aging population, and integrity refers to regulation and governance, especially as it relates to the private sector pension plans.

As the report states, “A system providing very generous benefits in unlikely to be sustainable whereas a system that is sustainable … could be providing very modest benefits. The appropriate trade-off between these two objectives will depend on many factors including the country’s social, economic and financial position.”


Mercer Global Pension Index

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