Compare Communities - Australia’s First Choice, when comparing Retirement Villages. Compare, select and save up to $15k in your next move in life. 1300 190 547
Compare Communities - Australia’s First Choice, when comparing Retirement Villages. Compare, select and save up to $15k in your next move in life. 1300 190 547
on the Wednesday, April 20, 2016
A slight drop in the index of Australia’s retirement savings system has seen it slip into third in the 2015 Melbourne Mercer Global Pension Index (MMGPI), acting as a reminder that despite being world-class, Australia needs further reform to continue to improve the retirement income system.
Australia’s overall score in the Index remained strong, although slower than many other countries when it comes to improving the sustainability of the system in terms of increasing workforce participation of older workers and reducing government debt.
Australia was once again ranked as having the most adequate pension system, however the overall score decreased from 79.9 in 2014 to 79.6 in 2015, moving the country further away from an elusive A grade, given to pension systems that score above 80. Denmark and the Netherlands are the only countries to achieve an A grade in the history of the index.
Now in its seventh year, the MMGPI measured 25 retirement income systems against a series of 40 indicators. The MMGPI is the world’s most comprehensive comparison of pension systems. It covers almost 60% of the world’s population and suggests how governments can provide adequate and sustainable benefits that protect their citizens against longevity risk, the risk of their ageing population outliving their savings, potentially one of the biggest economic and social risks facing many retirees today.
Author of the report and Senior Partner at Mercer, Dr David Knox said, “Implementing the right reform to improve pension systems and provide financial security in retirement has never been more critical for both individuals and societies.”
“The MMGPI is an important reference point for policy makers around the world to learn from the most adequate and sustainable systems. We know there is no perfect system that can be applied universally, but there are many common features that can be shared for better outcomes,” said Dr Knox.
We’re spending longer in retirement
All of the 11 countries that have been part of the MMGPI since it began in 2009 have experienced an increase in the expected length of retirement, with the average length rising from 16.6 years to 18.4 years.
Five countries – Australia, Germany, Japan, Singapore and the UK – have increased their pension age to offset the increase in life expectancies, but these are not enough to halt the increasing length of retirement.
How can Australia’s retirement savings system improve?
The MMGPI acknowledges that there is room for improvement in all countries’ retirement income systems. Suggested measures to improve Australia’s system include:
The full 2015 report can be viewed here.
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