Australia's superannuation system could be improved by increasing the pension age in line with changes to life expectancy, shifting retirement benefits into a partial income stream and limiting the age at which people can access private retirement savings.
The recommendations are part of the 2013 Melbourne Mercer Global Pension Index which found that while the Australian superannuation system could be improved it still ranked third in the world for the overall quality, adequacy and sustainability.
Other improvements to the system recommended in the Index report included increasing the number of older workers in the labour force while lifting the minimum age to receive benefits from private superannuation savings, so that retirement benefits are not available more than five years before the age pension eligibility. The report also recommended removing legislative barriers to encourage more effective retirement income products.
Australia's ranked third behind Denmark and The Netherlands, with an overall score of 77.8, up from 75.7 in 2012 where it also ranked third and well ahead of the United Kingdom (9th) and the United States (11th).
Mercer senior partner Dr David Knox highlighted the early move to defined contribution (DC) pension systems in Australia, labelling it a trailblazer in this area, and said the shift to a DC system was an ongoing trend around the world.
"The conversion of DC benefits into adequate and sustainable retirement incomes remains a largely unresolved problem in many countries, including Australia," Knox said.
"As countries grapple with rising life expectancies, increased government debt, uncertain economic conditions and a global shift to DC plans, there are still many lessons to be learnt and new solutions to be found, particularly for the post-retirement years.
"Developing effective and sustainable post-retirement solutions has to be one of the most critical challenges for policy makers and retirement industries around the globe."
The Index is now in its fifth year and measures the adequacy, sustainability and integrity of a country's pension system by examining the publicly and privately funded components of a pension system and as well as personal assets and savings outside the pension system.
