How advisers can keep Australia’s retirement system first class

Financial advice could help improve Australia’s now A grade pension system as long as people stop looking at their super as just a sum and start thinking about it as a retirement payment.

The 2026 Marsh CFA Institute Global Pension Index has placed Australia among the top six pension funds across 55 countries. The index doesn’t consider the role of financial advice but Tim Jenkins, partner at Marsh People and Investments, says there could be a role for advisers to play.

“[Financial advice] doesn’t make a difference at all to the index on here,” Jenkins tells Professional Planner. “What does matter is if there is further amendments to encourage more people to think about their superannuation as retirement pay as opposed to how much is my account balance. That is the bigger difference and maybe, if advisers help with that, then yes advice would help.”

“Financial advice becomes really important to individuals, to actually get assistance, to navigate the complexities of social security with superannuation. And super funds are in a position where they can provide help, guidance, and advice, but also available are independent of financial advisers,” says Jenkins.

The interaction of the age pension with superannuation is quite complex because “the age pension has an assets test, and an income test, and what you get depends not just on yourself, but on your partner, and whether you own a home,” he says.

“And therefore, it is very difficult for a superannuation fund to help an individual, with certainty, plan their retirement income.

“It’s a complex system and advice becomes increasingly important, given the complexities of the system.”

Australia in top 6

Australia comes as the sixth country behind others including the Netherlands, Denmark and Iceland. Countries are rated on adequacy, sustainability and integrity; Australia had an A grade on sustainability and integrity but a B+ on adequacy.

“What Australia does very well is deal with sustainability and integrity. With the ageing population in front of us where over the next 40 years, the over 65 population in Australia is going to increase by 87 per cent, whereas the under 20s is going to rise by only about 10 per cent, that’s a huge difference,” Jenkins says.

“The sustainability of the system depends on keeping costs under control, and the means tested age pension combined with superannuation is Australia’s secret sauce. It means that Australia has a system where the cost of the age pension is actually forecast to decrease rather than increase, which is extremely rare.”

Although adequacy was not an A grade, Australia still does it “pretty well”, according to Jenkins, as it works well for people who are earning below median income.

“The way the age pension works is it’s very generous for people who have been earning less in their careers, for a median income earner it is not bad. It’s well structured, and of course, with the way it is means tested, it’s sustainable and continues [if] your superannuation runs out you actually qualify for a full age pension,” Jenkins says.

“So it does that well on there. But that’s the area which Australia would improve on if it were to become a grade. It would look at increasing slightly the net replacement rates, which would involve some tweaks to the way that the means test works for the age pension.”

According to the index, Australia’s overall value could potentially increase if there was a focus on retirement income as the primary purpose of superannuation; the assets test on the means-tested age pension could be moderated to increase the net replacement rate for average-income earners taking minimum government drawdown; and if the level of household savings was raised the household debt reduced.