According to the Mercer CFA Institute Global Pension Index, Australia has slipped from sixth to seventh in retirement income. This drop comes after compulsory super contributions were increased to 12 per cent.
According to the Think Ahead Institute, while Australia’s superannuation system is the fourth largest savings systems in the world, the adequacy of retirement income is letting the system down in the Global Pension Index.
“The focus of the Australian superannuation system remains on lump-sum balances, with over half of retirees only drawing the minimum from their super,” it said.
“This behaviour is driven by Australian retirees’ fear of running out of money and it means that Australian retirees are not enjoying the lifestyle that they can afford in retirement.”
This slip in rankings coincides with falling confidence among clients. Data released through the 2025 Natixis Global Retirement Index has highlighted that many Australians are fearful about their retirement.
Eighty per cent of clients surveyed in the aforementioned index cited that they are not saving as much due to rising costs, with a 3.5 per cent increase to yearly costs, driving up uncertainty and lowering confidence.
For many, this leads to sacrifices being made to their lifestyle in retirement, opting for stockpiling super, rather than spending.
“Super is for spending, not stockpiling. Unless we give retirees the confidence to turn their savings into a reliable income, too many Australians will continue to ‘under-retire’ and miss out on the lifestyle they’ve worked hard for,” Challenger chief executive Nick Hamilton said.
“When retirees feel secure, they spend. That supports local businesses, creates jobs and drives prosperity. Building a retirement income system that delivers confidence is not just the right thing for retirees. It’s a win for the entire economy,” he added.
According to Challenger, initiatives such as the best practice principles for retirement incomes “should” help superannuation fund members achieve better outcomes, however, the system as a whole has not yet delivered on retirement income.
“Making sure that people are aware of their options in retirement and that they get the right advice, help or guidance at the appropriate time will lead to better outcomes for Australian retirees,” Challenger stated on the value of advice in this process.
