Key Takeaways
- • Australia ranked seventh overall in the 2025 Mercer CFA Institute Global Pension Index with a score of 77.6, up from 76.7 last year, and was graded B+ overall.
- • Australia earned A grades for sustainability and integrity but only a B for adequacy, which the index attributes to insufficient focus on retirement income as the system's primary purpose.
- • Former Mercer senior partner David Knox argues Australia has no compulsory retirement income requirements, unlike Netherlands, Iceland, Denmark, Israel, Singapore, Finland, Norway, Chile and Sweden.
- • The index notes the 12 per cent superannuation guarantee and upgraded growth forecasts helped Australia's score, while the top-ranked Netherlands scored 85.4.
Summary
Australia's superannuation system ranked seventh overall in the 2025 Mercer CFA Institute Global Pension Index, scoring 77.6 out of 100, up slightly from 76.7 last year. The index, a joint publication of Mercer, CFA Institute and Monash University, graded the system B+, alongside Sweden, Chile, Finland and Norway. Israel, Singapore, Denmark, Iceland and the Netherlands held the top grades. The Netherlands led the index with a total score of 85.4. Part of Australia's improvement reflected the increase in superannuation guarantee contributions to 12 per cent and upgraded economic growth forecasts.
The index described Australia's system as having "a sound structure, with many good features," but identified areas that separate it from an A-grade system. Australia scored A for sustainability and integrity but only B for adequacy. The report recommended greater focus on retirement as the primary purpose of the system, changes to the Age Pension assets test to lift the net replacement rate for average-income earners, higher household savings and lower debt, and a government super contribution for primary carers of young children.
David Knox, a lead author of the index for 16 years through 2024 and former Mercer senior partner, wrote in the October 2025 edition of Retirement Magazine that Australia lacks any compulsion around retirement income. He said the global comparison is "stark," stating "We have no [retirement income] requirements at all." Under current rules, retirees can withdraw their full superannuation balance at retirement, or leave it in an accumulation account subject to a higher tax rate than a tax-exempt pension account, with no drawdown or income requirements. Knox noted that peer systems, including Iceland, Israel, Singapore, Finland, Norway and Chile, require lifetime or ongoing income streams.
Tim Jenkins, 2025 index lead author and Mercer partner, said systems with few investment restrictions or government directions tend to perform better in the index. He suggested governments focus on making investment options attractive and promoting transparency and governance rather than imposing mandates. The index's first principle, "retirement first," holds that the primary purpose of a pension fund is to provide retirement income to participants and their dependents.
The index described Australia's system as having "a sound structure, with many good features," but identified areas that separate it from an A-grade system. Australia scored A for sustainability and integrity but only B for adequacy. The report recommended greater focus on retirement as the primary purpose of the system, changes to the Age Pension assets test to lift the net replacement rate for average-income earners, higher household savings and lower debt, and a government super contribution for primary carers of young children.
David Knox, a lead author of the index for 16 years through 2024 and former Mercer senior partner, wrote in the October 2025 edition of Retirement Magazine that Australia lacks any compulsion around retirement income. He said the global comparison is "stark," stating "We have no [retirement income] requirements at all." Under current rules, retirees can withdraw their full superannuation balance at retirement, or leave it in an accumulation account subject to a higher tax rate than a tax-exempt pension account, with no drawdown or income requirements. Knox noted that peer systems, including Iceland, Israel, Singapore, Finland, Norway and Chile, require lifetime or ongoing income streams.
Tim Jenkins, 2025 index lead author and Mercer partner, said systems with few investment restrictions or government directions tend to perform better in the index. He suggested governments focus on making investment options attractive and promoting transparency and governance rather than imposing mandates. The index's first principle, "retirement first," holds that the primary purpose of a pension fund is to provide retirement income to participants and their dependents.
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