Superannuation challenges push Australia down the global ladder

Aussie superannuation balances have passed $4 trillion, but we’re losing ground in some global measurements. There are key reasons for this.

Superannuation remains strong but is losing some global shine. Picture: iStock

When I started writing about superannuation two decades ago, I proudly reported that Australia was ranked in the top three globally for retirement savings systems.

However, we’ve been heading south since then, gradually losing places at the top of the table to other nations, according to key global studies.

The latest Natixis Investment Managers Retirement Index ranked the conditions for Aussie retirees at seventh globally in 2024, down from sixth in 2017 and fifth in 2014.

While Norway and Switzerland have long been the leaders, Australia now also sits behind Iceland, Ireland, Netherlands and Luxembourg.

Natixis examines subindices, and while Australia ranks third in retirement finances and seventh for health, we are 13th for quality of life and 16th for material wellbeing.

Investment giant Mercer also shows a fall for Australia in its retirement system rankings since 2019, when we were ranked third out of 48 nations, behind only the Netherlands and Denmark.

The latest Mercer CFA Institute Global Pension Index says Australian ranks sixth globally, down from fifth. For the first time we’re not Asia-Pacific leaders – Singapore has overtaken us.

However, before pressing the panic button, let’s put all this into perspective. We’re still comfortably inside the top 10 out of all countries when it comes to superannuation and retirement.

Our retirees are the richest age bracket nationally, thanks to many years of building investments and superannuation.

That said, nobody likes to be going the wrong way in any premiership ladder or rankings list, and there are weak spots in Australia that threaten to weaken us further if we don’t fix them.

Firstly, there’s a big wealth gap. Figures from the Association of Superannuation Funds of Australia and the Australian Taxation Office show the average super balances of males and females, of $183,000 and $146,000 respectively, are three times the size of the median balances of $66,000 and $52,000 for men and women.

That means more than half of all Aussies have a super balance below $66,000, and that’s not going to pay for a nice retirement.

Another pressuring our system is a lack of affordable and available professional financial advice.

Australia’s financial planner numbers have shrunk dramatically in recent years. Red tape and other costs have strangled many advice practices, resulting an exodus of advisers and not enough supply to meet demand.

This has pushed the average price of a financial plan to $5000, putting it out of reach for many households.

Natixis Investment Managers country head Louise Watson says many Aussies find retirement planning daunting “likely due to the limited access to financial advice”.

“If we are to close the retirement savings gap, advice needs to be affordable and easily accessible to all Australians,” she says.

Big questions are being raised about Australia’s lack of financial advice. Picture: iStock

ASFA CEO Mary Delahunty says Australia’s superannuation system needs “continuous refinement” and must fix the gaps “particularly in the face of increasing life expectancies and economic pressures”.

A rush of superannuation rule changes in recent years have added more flexibility and boosted Aussies’ nest eggs, and we all should expect the tinkering to continue.

There are moves to make simpler advice – without the mountain of paperwork currently required – more affordable for everyday Aussies, and this must happen.

Other countries may still overtake us, because they don’t suffer the constant Labor-Liberal battle over superannuation that has become tiring.

However, super remains the best and lowest-tax tool for saving for a comfortable future, and will become bigger and more important in the years ahead.