Australia’s retirement income system comprises a means-tested age pension (paid from general government revenue); a mandatory employer contribution paid into private sector arrangements (mainly DC plans); and additional voluntary contributions from employers, employees or the self-employed paid into private sector plans.
The overall index value for the Australian system could be increased by:
- Introducing a requirement that part of the retirement benefit must be taken as an income stream increasing the labour force participation rate at older ages as life expectancies rise.
- Introducing a mechanism to increase the pension age as life expectancy continues to increase increasing the minimum access age to receive benefits from private pension plans so that access to retirement benefits is restricted to no more than five years before the age pension eligibility age.
The Australian index value fell from 79.6 in 2015 to 77.9 in 2016 primarily due to a reduction in the net replacement rate.