The Australian Retirement Income System: Comparisons with and Lessons for the United States
Date of this Version
Australia has an atypical retirement income system: it comprises a flat-rate, non-contributory, affluence-tested age pension, and a mandatory, defined contribution accumulation plan to which employers must contribute 9.25 percent (moving to 12 percent) of wages on behalf of their employees. We briefly compare the Australian and US economies and demographies, and then describe the Australian arrangements and assess its economic efficiency and efficacy in delivering retirement support. We focus especially on the means testing of the first pillar in Australia and the mandated membership of pre-funded private pension plans. We conclude by considering insights for the evolution of the US pension reform debate as demographic change unfolds.
Social Security, Pensions, Means testing
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The authors acknowledge financial support from the Australian Research Council Centre of Excellence in Population Ageing Research (CE110001029) and the Pension Research Council. Mike Orszag and other conference participantsprovided valuable comments. All opinions, errors, findings, interpretations, and conclusions of this paper representthe views of the authors and not those of the Wharton School or the Pension Research Council. © 2014 Pension Research Council of the Wharton Schoolof the University of Pennsylvania. All rights reserved.
Date Posted: 26 June 2019