Australia ranked 9th in the world for retirement outcomes in 2019 Natixis Investment Managers Global Retirement Index


Louise Watson

Australia ranked in the top ten for retiree wellbeing in 2019, despite sliding three places from 6th last year to 9th this year, according to the 2019 Natixis Investment Managers Global Retirement Index (GRI). Released yesterday, the index assesses 44 countries on the factors that drive retirement security, providing an overall ranking and percentage score as an indicator of the attractiveness of a country’s retirement environment.

Australia’s high ranking was once again the result of a strong showing in the Finances in Retirement sub-index. Australia placed 4th overall in this index, despite a slightly lower score compared with last year. Compulsory superannuation and the positive outcomes it produces for retirees lies at the heart of the high ranking, but Australia also scored well in the categories of interest rates (6th) and bank nonperforming loans (8th) – both signs of a robust financial system.

Global recognition of the need to increase retirement age

The GRI highlighted that compared with 1970, individuals in OECD countries are living longer and retiring earlier, at the same time as life expectancy is increasing.

Commenting on the findings, Damon Hambly, CEO for Natixis Investment Managers in Australia said: “Australia’s superannuation system is the envy of many other countries and provides retirement security for Australians, but the fact is that most balances are too low, particularly given our ageing population, which is why our retirement age is set to increase to 67 in 2023. Along with Denmark, we are the first of a number of OECD countries to take this step – the United States and Spain are next in 2027.”

Despite Australia’s overall high ranking, it slipped in a number of areas. Quality of Life, for example, was much lower (15th), compared with 9th two years ago due to weaker performance in the happiness and environmental factors indicators. Australia ranked first in air quality but slipped down to sixth-lowest for environmental factors.

Australia also slipped in the Material Wellbeing, which measures income equality, income per capita and unemployment, falling from 21st to 24th place.

Australia improved this year in the Health sub-index (11th), which measures life expectancy, health expenditure per capita, and non-insured health. This better rank is the result of higher scores in health expenditure per capita and insured health expenditure as well as a top ten (7th) finish for life expectancy.

Call to improve retirement outcomes for women

Not surprisingly, the GRI revealed that women face a different set of circumstances compared with men when it comes to material wellbeing. Women live on average longer than men, and tend to retire earlier – something which puts them at greater risk of outliving their assets in retirement. In addition, lower levels of employment, their historical role as primary homemakers, combined with discriminatory wage practices mean women also have less money saved for retirement.

Commenting on the findings Natixis Investment Managers Managing Director for Australia, Louise Watson, said: “If left unchecked, the different circumstances and barriers women face could potentially derail their retirement security.

“Australian women retire with on average 47% less superannuation than men yet they are likely to live 5 years longer[1] –  so it’s really important that we work together as an industry to find ways of closing the gap. Not just in terms of superannuation balances, but in striving to improve wage equality as well as women’s general level of financial literacy – so more women are empowered to take control of their own financial future.”

Old-age dependency in the spotlight

In other findings, the GRI pointed to demographic imbalances in some developed countries and highlighted the fact that countries with a relatively higher proportion of working-age adults are better equipped to support retirees.

Mr Hamby commented: “As the baby boomers continue to age out of the workforce, the responsibility for contributing to the public pension system will fall more and more onto younger workers’ shoulders.

“The challenge is that higher old-age dependency ratios can significantly impact public finances as governments struggle to pay for rising social security obligations from falling tax revenues. Potential solutions that have been suggested for this problem include raising the retirement age and encouraging more people to continue working longer, potentially past retirement age. But most important of all is helping Australians to understand the importance of investing for the long term, and starting as early as possible, if they are to secure their financial future,” he said.

Key points:

  • Australia remains in the top ten for the third year in a row – but slides three places to 9th overall
  • Australia improved in Health (11th) and Material Wellbeing (24th) sub-indices, but lower scores in Quality of Life (15th) and Finances (4th) pushed down its overall performance
  • New Zealand, in comparison, retains its 5th place ranking
  • Iceland, Switzerland and Norway remain the top three for the third year running
  • Call to address widening gap in retirement outcomes for men and women
  • Index examines the factors that drive retirement security to provide a comparison tool for best practice in retirement policy

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