Australian super ranked third in world
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.
Frequently Asked Questions about this Article…
Australia’s $1.6 trillion superannuation system was ranked third best in the world by the Melbourne Mercer Global Pension Index, receiving strong marks for integrity and described as having a sound structure with some areas for improvement.
The ranking came from the Melbourne Mercer Global Pension Index (prepared with the Australian Centre for Financial Studies). Australia’s score improved to 77.8 points, up from 75.7 in 2012.
Mercer attributed much of Australia’s improved score to the Stronger Super reforms, which strengthened governance and regulation and required super funds to offer a low‑cost default fund for disengaged members.
The report recommended requiring part of retirement benefits to be taken as an income stream, boosting labour‑force participation among older workers, increasing the pension age as life expectancy rises, aligning superannuation access age with the pension age, and removing legislative barriers to better retirement income products.
Funded by the Victorian government, the report notes a global shift away from defined‑benefit pension schemes, meaning policymakers and funds need to focus more on providing reliable retirement income rather than only on accumulating wealth.
David Knox highlighted that an ageing population means Australians should change how they view retirement, and businesses should create more flexible workplaces to make better use of older workers’ skills.
The Netherlands and Denmark ranked ahead of Australia. The report placed the UK ninth and the US 11th in the global ranking.
Everyday investors can note that Australia’s system ranks highly but faces reform opportunities: expect ongoing policy focus on income‑stream products, possible alignment of super and pension ages over time, and broader encouragement for older workers to stay in the workforce — all of which could affect retirement planning choices.
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