Australia has continued its status as one of the world’s best retirement savings systems, ranking just behind Denmark and the Netherlands for the quality of super programs, according to the recent annual Melbourne Mercer Global Pension Index. And continuous improvement with reforms leading to improved governance and stronger regulation has bolstered the quality of the Australian system, the results indicate. Released yesterday, the 2013 index gives Australia’s $1.6 trillion retirement savings program a score of 77.8 points out of 100, and a B+ rating. Denmark received a score of 80.2 and an A rating, with the Netherlands on 78.3 and B+. Australia’s score climbed from 75.7 in 2012 due to stronger regulatory requirements.
Australia has continued to rank third in the world for the overall quality, adequacy and sustainability of its superannuation system, with the Stronger Super reforms of improving its performance in the 2013 Melbourne Mercer Global Pension Index. Australia ranked third for the second year in a row, behind Denmark and The Netherlands. The introduction of the stronger regulatory requirements around superannuation lifted the nation’s overall score from 75.7 in 2012 to 77.8 in 2013. In comparison the United Kingdom ranked ninth and the US ranked eleventh. The Index report noted that the net replacement rate in Australia, which measures an individual’s pre-retirement income paid in retirement, had also improved…Mercer senior partner Dr David Knox said the index research also highlighted the increasing move to defined contribution (DC) pension systems (a way to save for your retirement that your employer provides, contributes to or “sponsors”) around the world, an area in which Australia has lead the way.
“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,” Knox 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…”
Reported by Jason Spits at Money Management. READ MORE
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