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

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  • Julie Agnew

Abstract

Australia’s retirement income system is regarded by some as among the best in the world. It has achieved high individual saving rates and broad coverage at reasonably low cost to the government. Australia’s system does have shortcomings. It is heavily dependent on defined contribution plans and is vulnerable to weaknesses in such programs. Its government old-age pension is a means-tested benefit, which creates potentially troublesome incentives for workers with defined contribution accounts. This brief provides an overview of the system and recent reforms. The first section presents the Australian system. The second section reviews recent reforms, which have focused on the individual account component of the system. The third section discusses outstanding issues. The fourth section offers some potential lessons for the U.S. retirement system. The final section concludes that the recent reforms should strengthen Australia’s system and provide lessons to other nations that increasingly depend on 401(k)-type individual accounts.

Suggested Citation

  • Julie Agnew, 2013. "Australia’s Retirement System: Strengths, Weaknesses, and Reforms," Issues in Brief ib2013-5, Center for Retirement Research.
    • Handle: RePEc:crr:issbrf:ib2013-5
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    File URL: http://crr.bc.edu/briefs/australia%E2%80%99s-retirement-system-strengths-weaknesses-and-reforms-2/
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    Cited by:

    1. Wei-Ting Pan, 2016. "The Impact of Mandatory Savings on Life Cycle Consumption and Portfolio Choice," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 32, July-Dece.
    2. John Beshears & James J. Choi & Joshua Hurwitz & David Laibson & Brigitte C. Madrian, 2015. "Liquidity in Retirement Savings Systems: An International Comparison," American Economic Review, American Economic Association, vol. 105(5), pages 420-425, May.
    3. Mr. Marc Gerard, 2019. "Reform Options for Mature Defined Benefit Pension Plans: The Case of the Netherlands," IMF Working Papers 2019/022, International Monetary Fund.
    4. Zhu, Rong, 2021. "Retirement and voluntary work provision: Evidence from the Australian Age Pension reform," Journal of Economic Behavior & Organization, Elsevier, vol. 190(C), pages 674-690.
    5. Frijters, Paul & Johnston, David W. & Shields, Michael A. & Sinha, Kompal, 2015. "A lifecycle perspective of stock market performance and wellbeing," Journal of Economic Behavior & Organization, Elsevier, vol. 112(C), pages 237-250.
    6. Prasetyono, Pipin, 2017. "Analyzing non-contributory social pension programs," MPRA Paper 97670, University Library of Munich, Germany.
    7. Wei-Ting Pan, 2016. "The Impact of Mandatory Savings on Life Cycle Consumption and Portfolio Choice," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 2-2016, January-A.

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