How does Australia's Government and superannuation pension system measure against those of other countries?

Is it the best?

Well, not quite but almost, according to the latest issue of the annual Melbourne Mercer Global Pension Index, conducted by Mercer in partnership with the Australian Centre for Financial Studies. The Victorian Government finances the index.

The index grades 14 countries on a score from A to E on the basis of adequacy, sustainability and integrity.

No country scores an A. Australia is awarded a B with a score of 72 per cent - coming behind Netherlands (78.9%), Switzerland and Sweden. China came in last among the countries examined with a D-grade score of 40.3 per cent.

There is an increasing focus in the Australian community, Government and financial services on the pension side of the superannuation equation. Mercer calculates that within 15 to 20 years, superannuation benefits being paid out will exceed contributions. This underlines the importance of such studies as the Melbourne Mercer Global Pension Index.

In the December issue of Superfunds magazine, published by the Association of Superannuation Funds of Australia (ASFA), Dr David Knox, senior partner for retirement, risk and finance with Mercer, provides an excellent summary of the index's findings from an Australian perspective.

Knox writes that the index finds the some of the ways to improve our Government and superannuation pension system include:

• Increase the level of compulsory savings.
• Promote more diversity of retirement income, and require retirees to take at least some of their super benefits as income.
• Encourage more labour force participation among older workers. Presumably, this would involve encouraging both employees and employers.
• Automatically lift the age for eligibility to the age pension as life expectancy increases.

With the ageing of Australia's population and the escalating numbers of baby boomers in retirement or to retire within the next few years, pressure is increasing to have the best-possible retirement incomes system. According to the index, Australia's weakest point in this regard is adequacy.