Australia has the world’s second best retirement savings system after that of Denmark, according to the findings of a new report.
The Melbourne Mercer Global Pension Index showed Australia’s ability to fund the lifestyles of retirees had climbed one place in the index compared to a year ago.
Australia’s position rose thanks to recent increases in compulsory superannuation payments from nine per cent of wages to 9.5 per cent from 1 July this year.
It also showed increasing super contributions to 12 per cent over the longer term would help ensure a sustainable retirement income for Australians.
But the report found Australia’s retirement savings system could be improved by ensuring older workers stayed in the labour force longer and by lifting the age at which retirees can access the pension and superannuation to account for longer life expectancies.
The survey also called for greater transparency from governments and superannuation providers to improve trust in the system.
“Ensuring transparency and the trust of individuals is becoming increasingly important,” Mercer senior partner Dr David Knox said.
“If you lose community trust in a pension system, you risk losing the effectiveness of the system,” he said.
“Governments, regulators and financial industries have to ensure good governance frameworks and practices that promote regular easy-to-understand communication, clear benefit projections, and access to comparative information in a cost-efficient manner.”