Australia's retirement system has risen in the global ranking of pension systems, but it still has room for improvement, according to Mercer's latest rankings of global pension systems.
According to the 2019 Melbourne Mercer Global Pension Index, Australians enjoy the third best retirement system in the world, up a single place from 2018.
The report - which is supported by the Victorian government and conducted in conjunction with the Monash Centre for Financial Studies - showed Australia lacks when compared to the Netherlands and Denmark, the nation's registering first and second in the index, with Australia scoring a B+, thanks to an overall score of 75.3.
For Australia to rank higher, the index said several issues would need to be addressed, including introducing some income requirements at retirement and increasing the Superannuation Guarantee from 9.5% to 12% as currently legislated.
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The report's author, Mercer's David Knox, noted the flexibility afforded to Australians upon receipt of their retirement benefit at retirement, but stopped short of calling for all Australians to adopt the same strategy for dealing with such a lump sum. .
"We're not suggesting that everyone has to buy an annuity or a pension," Knox said.
"But we are suggesting that if there are some income requirements, some income focus on the system, that would improve the score."
The report also called for the assets test taper to reduce from $3 to $2.25 per fortnight in an effort to improve adequacy for Australian retirees and lift the score.
Mercer claimed the report was the first international study of its kind to document the wealth effect - which explains increased spending as a result of rising wealth - in relation to pension assets.
With pension funds holding more by way of assets, Knox said people felt more financially secure and were thus borrowing money to improve their standard of living prior to retirement.
"As the wealth of an individual grows, whether it be in home ownership, investment portfolios or their retirement savings, so does their comfort with amassing debt," he said.
"The evidence suggests on a global basis, for every extra dollar a person has in pension assets, their net household debt rises by just under 50 cents."