New research has examined how Australia’s retirement funding system compares to those offered by other countries, with the Aussie Age Pension and superannuation schemes found to contribute to one of the “most sustainable and progressive” in the world.
The ARC Centre of Excellence in Population Ageing Research examined the current state of Australia’s retirement income systems, as well as projecting how they will fare in the future.
“The Australian retirement system is among the most sustainable and provides a more progressive level of replacement rates than seen in other countries,” Professor John Piggott, from CEPAR said. “The system continues to score highly. But weaknesses identified to date have included a lack of requirement or incentive to take benefits as income streams, and incomplete provision of information to members.”
The findings have been compiled into three research briefs which focus on the public and private elements of retirement incomes in Australia, including the Age Pension, poverty in retirement, superannuation and the existing financial behaviour of consumers.
Piggott added: “Our analysis shows that standards of living of older people have improved over the last decade. About three in five older Australians can afford a lifestyle that is deemed to be above a modest level, according to a set of commonly used budget standards.
“Households reaching retirement age today have incomes about 45 per cent higher than those reaching the same milestone ten years ago.”
While the Australian system was found to work well, the research also highlighted some failings as it was revealed there is a lack of information when it comes to informing retirees about the benefits they could be entitled to as a way to boost their income streams, as well as a lack of incentive for them to do so.
There are also more difficulties for those who rent and do not own properties, with recommendations of a 40 per cent increase to rental assistance payments — something that would would significantly reduce poverty among single renters.
Piggott added: “The overall view is that the system is unique, broadly affordable and suitable for most Australians. It costs less than 3 per cent of GDP and keeps most out of poverty, but not renters.
Lead author Rafal Chomik said: “Australian old age poverty is low once we take account of housing, but the system fails renters. Home owners are significantly better off than renters.
“About 60 per cent of lone renters are in poverty, which translates to low standards of living. For example, a quarter of pensioners who rent alone spend on average less than $6 on food per day. Our analysis suggests an increase in rental assistance payments of 40 per cent would reduce lone renter poverty by almost 20 percentage points, at a cost of about $380m.”
A report in The Telegraph recently revealed that the United Kingdom actually has one of the lowest pensions in the developed world, with recipients receiving on average more than $300 less than Australian pensioners per fortnight.
Those over 65 in Australia receive a maximum sum of $916.30 per fortnight for individuals, while couples are paid as much as $1381.40. However, single pensioners in the UK take home a sum of just £164.35 (AU$296.57) each week, which equates to around AU$592.78 per fortnight.
The pension age is the same in both countries, with people qualifying for the state-funded pension once they reach 65. However, that only changed recently for women in the UK as, until this year, female workers could retire once they reached the age of 63.
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