Super reforms improve Australia’s performance in Global Pension Index
2013 Melbourne Mercer Global Pension Index launched
- Denmark’s score slides but holds onto no. 1 spot
- Australia holds onto 3rd spot on global stage – improving score
- Fundamental change in approach to post-retirement solutions needed
- Index increases to 20 countries, covering over 55% of world population
StrongerSuper reforms have improved Australia’s performance in the 2013 Melbourne Mercer Global Pension Index, with our overall score increasing to 77.8 from 75.7 in 2012. Our overall ranking remains at third position. Denmark and Netherlands held onto the top two positions, but Australia is closing the gap and has an ‘A’ Grade in sight.
The Melbourne Mercer Global Pension Index is now in its fifth year and has increased from 11 countries in 2009 to 20 countries in 2013 with Mexico and Indonesia the latest additions. It now covers more than 55% of the world’s population.
The Index looks objectively at both the publicly funded and private components of a system as well as personal assets and savings outside the pension system. It measures the adequacy, sustainability and integrity of a country’s pension system and is published by the Australian Centre for Financial Studies (ACFS) in conjunction with Mercer and is funded by the Victorian State Government.
The research identifies possible areas of reform for each country that would provide more adequate retirement benefits, increased sustainability, and greater trust in the pension system. Suggested measures to improve Australia’s system include:
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 increasing the minimum access age to receive benefits from private pension plans so that retirement benefits are not available more than five years before the age pension eligibility removing legislative barriers to encourage more effective retirement income products Professor Deborah Ralston, Executive Director of the ACFS said the global response to the Index continues to indicate its value to government, industry and academia as they debate how best to provide for an ageing population.
The 2013 Index includes a special chapter on post-retirement solutions in a defined contribution (DC) world.
Dr David Knox, Senior Partner at Mercer and author of the research, said “As countries grapple with rising life expectancies, increased government debt, uncertain economic conditions and a global shift to DC plans, there are still many lessons to be learnt and new solutions to be found, particularly for the post-retirement years.”
“A DC system is well established in many countries and it is clearly heading this way in many others. Australia has arguably been a trail blazer in terms of adopting a DC system. However, the conversion of DC benefits into adequate and sustainable retirement incomes remains a largely unresolved problem in many countries, including Australia.
“Developing effective and sustainable post-retirement solutions has to be one of the most critical challenges for policy makers and retirement industries around the globe,” said Dr Knox.
“Many of the challenges relating to ageing populations are similar, irrespective of each country’s social, political, historical or economic influences. Many of the desirable policy reforms to alleviate these challenges are also similar and the Index aims to highlight the best solutions and share them globally,” said Professor Ralston.