According to the latest report from Mercer, the world's leading talent, health, pension and investment consulting agency, according to the Melbourne Mercer Global Pension Index (Melbourne Mercer Global Pension Index),Australia's ranking dropped from third to fourth.

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The Mercer report believes that the retreat of the Australian pension system in the global rankings is related to the previous reform proposals to postpone the retirement age.

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Although the Morrison government has abandoned this much-maligned plan-raising the retirement age from 67 to 70, this proposal casts many uncertainties on the future of Australia's pension system.

In addition, the index ranks Australia's pension and retirement system based on metrics such as sustainability, adequacy and completeness.

In Australia, Centrelink pension (age pension) and superannuation (superannuation) are both considered.

In the past three years, Australia has been ranked third after the Netherlands and Denmark, at the "A" level.

But by 2018, Australia has been replaced by Finland. Both achieved "B" grades, but Finland scored higher.

"Another very simple reason is that in January 2017, Australia introduced a more stringent personal asset test." Mercer senior partner David Knox said. "This will affect those who have worked under the pension system for many years and have a significant advantage in receiving pensions."

In addition, Australia's score is also affected by abnormally high household debt and low savings rate.

In 2015, changes in the asset test affected the wealthiest retirees.

In early 2017, more than 90,000 retirees lost part of their pensions, and part of their pensions for 236,000 retirees was cut.

At the same time, 17 pensioners at the bottom of society and the middle class have increased their pensions by about A$30 per week.

Nevertheless, the reform of the asset test prompted the Organisation for Economic Cooperation and Development (OECD) to lower the expected annual income per capita in Australia from 55.7% of pre-retirement income to 40.7%.

This means that Australians with an annual salary of A$80,000 can earn 40.7% of their pre-retirement income when they leave the labor market.

This decline affected the Mercer Index's assessment of the "adequacy" of the Australian pension system.

Before the asset test reform, an ordinary couple in Australia could own up to 37.50 thousand Australian dollars in additional assets in addition to their own housing. Beyond this value, pensions will decrease accordingly.

Last year, the Australian government announced that it would tighten pension eligibility. Starting in July 2018, all applicants will need to have lived in Australia continuously for at least 7 years before they are eligible for pension benefits or disability support allowance (DSP).

The conditions for couples and partners to receive a full pension, in addition to owning a home, the additional assets jointly owned must be within A$38.05.

In the income test of eligibility for pension benefits, if a single person earns less than 168 Australian dollars a fortnight, and his spouse and partner earns less than 300 Australian dollars a fortnight, they are eligible to receive the full pension. If the income exceeds this standard, the welfare pension will be reduced by 1 Australian dollars for each additional Australian dollar of income.

Due to the rising cost of living, the payment standard of various welfare payments in Australia will increase every six months. Starting on September 2018, 9, the pension and welfare payments received by approximately 28 million Australians will increase.

At present, the pension that a single person can receive every two weeks is based on A$826.20, an increase of A$8.7. Couples receiving pensions can receive 1208.40 Australian dollars every two weeks before, and after the implementation of the new policy, it will increase 13.20 Australian dollars every two weeks.

References:

https://www.afr.com/personal-finance/superannuation-and-smsfs/scott-morrison-blamed-for-retirement-system-falling-out-of-global-top-3-mercer-20181021-h16x5g