A Brief Critical Review of Australia's Retirement Savings System

6 Pages Posted: 17 Feb 2012

See all articles by Jack Gray

Jack Gray

University of Technology Sydney (UTS)

Ronald Geoffrey Bird

University of Technology Sydney (UTS) - School of Finance and Economics; Financial Research Network (FIRN)

Date Written: December 1, 2011

Abstract

On the first day in a new job in Australia, an employee will be asked “in which bank will we deposit your salary?” and “in which fund will we deposit your retirement savings contributions?”

Australian companies have (almost) entirely outsourced retirement savings. For better and worse, companies and other organizations have (almost) no interest in or responsibility for their workers’ retirement; moreover (almost) all retirement savings vehicles are defined contribution (aka accumulation). This is surprising for a country with bipartisan support for the benefits of government-funded social welfare programs, especially because the retirement policies were driven largely by the union movement.

Mercer ranks Australia’s pension system as one of the world’s best. Its size and success make it a magnet, and a rainmaker, for financial services professionals. The system has become fraught with myriad choices, which few members take advantage of, but which drive up overhead costs. In this article we review the history of Australian pensions and current reforms, and we point out where we believe the system could better serve its many millions of members.

Keywords: Australia retirement savings system, Australia pension system

JEL Classification: G10, G11, G23

Suggested Citation

Gray, Jack and Bird, Ronald Geoffrey, A Brief Critical Review of Australia's Retirement Savings System (December 1, 2011). Journal of Investment Consulting, Vol. 12, No. 2, pp. 53-58, 2011, Available at SSRN: https://ssrn.com/abstract=2004663

Jack Gray (Contact Author)

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007
Australia

Ronald Geoffrey Bird

University of Technology Sydney (UTS) - School of Finance and Economics ( email )

Haymarket
Sydney, NSW 2007
Australia
+ 612 9514 7716 (Phone)
+ 612 9514 7711 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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