Australia has the world’s third best retirement income system, a new global study has found.
Denmark claimed the top spot for the sixth consecutive year, the Netherlands was ranked in second place, followed by Australia.
The index is based on research to assess the public and private pension systems of 30 countries, collectively representing 60 per cent of the world’s population.
In 2017, New Zealand, Colombia and Norway were included in the index for the first time.
Another change this year was the addition of a new economic growth question to judge a system’s sustainability, which resulted in Denmark and the Netherlands both losing their A-rating for the first time, dropping to a B+, in line with Australia.
Australia’s household savings rating also slipped this year from 77.9 to 77.1, down from its peak score, in 2014, of 79.9.
Australia’s fall in the index was blamed on a reduction in the household savings rate and slower economic growth as the economy became more advanced and the population aged, the authors said.
The Australian Centre for Financial Studies’ Edward Buckingham said there was room for improvement in Australia’s system.
“The reason is, simply, as we live longer, healthcare and public service costs will escalate and our society, like others, will face pressure to fund the needs of the old at the expense of the young,” Professor Buckingham said.
“Optimising the use of savings set aside for retirement is a perennial responsibility that demands strategic improvement of pension systems worldwide.”
Australia’s retirement income system could be improved by increasing the labour force participation rate at older ages, lifting the pension age, and closing the gap between the minimum preservation age and pension eligibility, the report found.
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