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Robust super system needs more engagement
There is still work to be done to enable Australian retirees to support themselves based on income per capita, indicating a greater need for individual engagement with super.
Such was the finding of the Natixis Global Asset Management's 2016 Global Retirement Index, which ranked Australia sixth in the world for retiree wellbeing but said the country's generous social security scheme was its Achilles heel.
The index found that while Australia's superannuation system was viewed as one of the best in the world with robust best practice standards, the country fell behind on its material wellbeing score, which measures a retiree's ability to support themselves based on income per capita, unemployment, and income equality.
Natixis Australia managing director, Kevin Haran, said asset managers needed to be innovative to help Australians achieve enhanced retirement outcomes.
"Australians benefit from mandatory superannuation policies however most still do not have an accurate picture of what is needed for a comfortable retirement," Haran said.
"Education and engagement is needed, as is better asset allocation. The investment community needs to collectively step up and provide durable portfolio solutions for retirement."
The global asset management firm said traditional pay-as-you-go models for government retirement benefits would be unsustainable in many Western countries like Australia with a burgeoning ageing population. Policy makers must ensure workers had access to alternative savings models.
It also called for smart policies that allowed favourable tax treatment for retirement savings to help retirees save more money and allow them to be self-sufficient in retirement.
On the upside, Australia's governance and low interest rate environment boosted its ranking in overall finances in retirement (fifth overall), while government indebtedness and low inflation rates were also a positive for the purchasing power of retirees.
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