UK - The Australian compulsory private superannuation model does not ensure a higher savings ratio among scheme members, delegates were told.
Axa Australia chief executive Les Owen says universal adequate retirement saving in the UK market would be far from guaranteed if it followed the Australian model.
He said: “If we are looking for evidence that compulsory private superannuation is a good thing, then an important question is, despite the fall in savings ratios, are things nevertheless better in Australia than in other countries?”
Owen added: “Well, the answer appears to be no.”
He said savings ratios in Australia had declined steadily from around 11% in 1986 when compulsory superannuation was introduced to pretty close to zero in 2002. “While savings ratios in the US and the UK have fallen, they have not fallen as fast as those in Australia and in 2002 stood at substantially higher levels.”
Owen said this surprising statistic demonstrated one of the principal difficulties in making compulsion work, namely, ensuring that scheme members saved in excess of the compulsory level.
He said despite regular commentators suggesting otherwise, the number of lessons the UK could learn from Australia were, in fact, quite limited.
“There is little evidence that Australia is better positioned than the UK to cope with the financial burden of an ageing population.”
He added that, in particular, the cost of delivering funded superannuation seemed to be generally higher than those in the UK.
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