1. Retirement in Australia: yesterday, today and tomorrow
Australia's superannuation system - the Superannuation Guarantee - is now in its 25th year. By almost all measures, this system has been an exceptional success that is playing an important role in supporting Australia's current and future prosperity.
According to Willis Towers Watson's study of 22 major pension markets, Australia has the world's third largest pension holding, with approximately A$1.9tn in assets - a figure that is growing by a net $100m a day. This is smaller than the far more populous UK and USA, however, it is well ahead of both markets in terms of 10-year US$ CAGR and assets to GDP ratio.
Furthermore, Mercer has nominated Australia as the third highest rating pension system in the world. Again, it sits well ahead of both the UK and USA, primarily due to the requirement for compulsory contributions and the strong skew to defined contributions. In fact, Australia is often referred to as a model for the changes that have recently been implemented in the UK.
And, most importantly, the system has helped to ensure that millions of Australians are better prepared for retirement. There have been some legitimate concerns raised regarding the system's ability to fully achieve this goal, but these concerns should be considered in the light of two realities.
First, the system has not yet reached its full cycle. Australians retiring today are still only receiving the benefits of 25 years of accumulation. As every year passes, Australian retirees move closer to the goal of career-long accumulation... a journey that will be completed in the mid-2030s.