Australia's retirement system is good but it could be doing better in several areas according to a modeling tool that tracks 10 of the industry's key indicators.
The latest data coming from the AIST Mercer Super Tracker shows Australia's superannuation system could further its reach, and Australian's could improve their voluntary contributions.
Mercer senior partner David Knox told the Conference of Major Superannuation Funds yesterday that Australia's super coverage (68.5% of the workforce) is considerably less than other countries who have well developed and well respected systems.
"We thought we might do pretty well here because our super system is compulsory - well it is compulsory for employees earning more than $450 a month. But it is not compulsory for the self-employed," Knox said.
"Even Chile is 80% - higher than we are. Our goal for the scoring system is to head for 80%. We could improve in terms of coverage."
Knox added that Australia's voluntary contributions could be higher.
"Employer contributions or, in effect, the Super Guarantee, in the 12 months to September last year, was $72.6 billion. Voluntary contributions were $30.9 billion or 1.9% of GDP," Knox said.
"Talking to a couple of fund CEOs at this conference - they're seeing the level of voluntary contributions already down on this year compared to last year.
"I think that indicates a lot of the turmoil in the media about the future of super, tax concessions etc. and there's a loss of confidence. And if there's a loss of confidence, then there's less contributions and it affects adequacy longer term. Our goal is to have voluntary contributions at 3% of GDP, we're at 1.9%. I think we can do better."
The tracker allows for changing economic conditions and has factored in the new Age Pension assets test that comes in January next year.
According to the tracker, the average income earner will earn less government support than the lowest income earner or the highest income earner.
Both the Australian Institute of Superannuation Trustees (AIST) and Mercer have called on the government to urgently revise its new Age Pension assets test.
AIST chief executive Tom Garcia said the new test was extremely harsh and threatened the integrity and sustainability of the super system by disincentivising voluntary saving.