While many of the world’s advanced economies are facing political challenges as they adjust their pension systems to become more economically sustainable, a Research note from The Association of Superannuation Funds of Australia (ASFA), The cost of pensions across advanced economies1, projects Australia’s pension system will become more cost-effective by 2060.
The report revealed that in many of the world’s advanced economies, poor design, aging populations and increasing inflation are creating significant challenges for the long-term sustainability of their pension systems.
For The Organisation for Economic Cooperation and Development (OECD) countries, average government spending on pension payments will rise from 9.0 to 10.4 per cent of GDP over the next forty years.
In contrast, the Australian government spends considerably less on our pension system, and this figure is expected to decrease – from 2.6 to 2.1 per cent of GDP by 2060.
As a result, while many OECD countries face politically contentious reforms to their pension systems, Australia’s system is well placed to meet the needs of our aging population well into the future.
At Australian Retirement Trust (ART), we’re committed to doing our part to support the long-term sustainability of Australia’s pension system by helping our members achieve a comfortable, self-funded retirement that minimises reliance on the Age Pension.
1. ASFA Research note: The cost of pensions across advanced economies, Feb 2023