Reforming the Australian Retirement System: Mandating Individual Accounts
April 2004
GIB#4
Introduction
Australia’s new retirement income system combines two components. The first is the Age Pension — a means-tested allowance, funded out of general government revenues, which was put in place as a welfare program in 1908. After its expansion in the 1970s, the Age Pension has become more of a universal entitlement with a claw back that reduces, then eliminates, benefits for upper-income recipients. The second component is the Superannuation Guarantee (SG) — a mandatory defined contribution savings program put in place in 1992, which takes 9 percent of earnings. Preexisting employer defined benefit pension programs are also adopting the SG’s defined contribution format...
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Steven A. Sass is a research associate at the Center for Retirement Research at Boston College and author of The Promise of Private Pensions (Harvard University Press 1997) and co-author of “Social Security: How Social and Secure Should It Be?” in Steven Sass and Robert Triest, eds., Social Security Reform: Links to Savings, Investment, and Growth (Federal Reserve Bank of Boston 1997). Sass thanks Linda Rosenman, Peter Whiteford, Alicia H. Munnell, Andrew Eschtruth, and Amy Chasse for carefully reading the piece and making valuable substantive and editorial contributions. The Center gratefully acknowledges the Alfred P. Sloan Foundation and the Cogan Family Foundation for providing support for this publication.