Australia’s Retirement System: Strengths, Weaknesses, and Reforms


The brief’s key findings are:

  • Australia’s retirement system has two key components: a means-tested government benefit and a mandatory savings account financed by employers.
  • The government benefit provides a basic income, and about three quarters of retirees qualify.
  • The savings accounts require employer contributions of 9 percent of pay for each worker, rising to 12 percent by 2020, and workers choose how to invest.
  • By making savings mandatory, Australia has solved the pension coverage problem, and the system will provide substantial benefits once it fully matures.
  • Key concerns remain, such as incentives to spend down savings to get a higher government benefit and low levels of annuitization.

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