Australia 2011

Australia’s retirement income system comprises a means-tested age pension (paid from general government revenue); a mandatory employer contribution paid into private sector arrangements (mainly DC plans); and additional voluntary contributions from employers or employees paid into these private sector plans.

The following table shows Australia’s position when compared to the 15 other countries and some of the indicators that either scored relatively well or poorly.

The overall index value for the Australian system could be increased by:

• raising the level of mandatory contributions to improve the level of benefits
• introducing a requirement that part of the retirement benefit must be taken as an income stream
• increasing the labour force participation rate amongst older workers
• introducing a mechanism to increase the pension age as life expectancy continues to increase
• reducing the costs of the system by encouraging greater efficiency

The Australian index value increased from 72.9 in 2010 to 75.0 in 2011 due primarily to a real increase in the age pension and a higher net household saving rate.