Commenting on the 2015 Mercer Global Pension Index, in which Australia dropped to third place behind the Netherlands, Mercer senior partner David Knox said it is vital to remove politics from superannuation.
Mr Knox said the Australian pension system is maturing, with total assets at 120 per cent of GDP.
This compares the coverage of Denmark (which topped Mercer’s index for the fourth year running) and the Netherlands, which both sit at between 160-170 per cent of GDP.
“Our system is maturing, but one of the things to be aware of is we’re living longer,” Mr Knox said.
“But if you don’t adjust the pension age – the age at which we retire – then there are going to be additional stresses on the system,” he said.
Mercer recommends in the 2015 report that the pension age be automatically adjusted with increases in life expectancy, Mr Knox said.
“We don’t get the political football of ‘should we increase the pension age from 67 to 70 or whatever’ – it should just happen automatically,” he said.
“Countries such as the Netherlands do that every five years – they have an automatic adjustment to their pension age linked to life expectancy.”
He pointed to Joe Hockey’s first federal budget, which attempted to increase the pension age from 67 to 70 “creating great difficulties getting it through the Senate”.
“If you can adjust when the age pension is entitled – automatically with life expectancy that removes the politics from it,” Mr Knox said.
