Why Australia’s Pension System Isn’t ‘Super’ Enough

At a time when pension systems around the world are creaking, Australia’s is a standout. In terms of financial security for retirees, it ranked third globally behind the Netherlands’ and Denmark’s in one survey. Yet there are also urgent calls for changes to a system that’s projected to grow from almost A$3 trillion ($2 trillion) to A$5.4 trillion within a decade.

The main part is known as superannuation, or more colloquially as “super.” It’s a mandatory scheme that dates back to the 1980s when trade unions agreed to give up pay rises for members in return for employer-funded pension contributions. Companies pay 9.5% of a worker’s gross salary into a retirement fund that typically can be accessed from age 65. Forcing people to save for retirement eases the strain on Australia’s means-tested state pension, which like other national plans is under pressure as people live longer.