Australia’s retirement system achieves top global ranking
Australia’s retirement system has earned its first A grade in the Marsh CFA Institute Global Pension Index, joining the Netherlands, Denmark, Iceland, Singapore, and Israel at the top of the rankings.
The 2026 index, released by Marsh and CFA Institute, compared 55 retirement income systems covering 66 per cent of the world’s population. Australia achieved an overall score of 80.6 and an integrity score of 86.8, meeting the criteria for an A grade which requires a score above 80.
Maturing System Drives Upgrade
Tim Jenkins, a partner at Marsh and the report’s lead author, stated that the advancement mirrored the evolution of Australia’s superannuation framework.
“Australia’s move from a B+ to an A grade reflects the continued maturation of its retirement system,” Jenkins told InvestorDaily.
The primary factor was an improvement in the net pension replacement rate at retirement, supported by the legislated objective of superannuation and greater industry focus on retirement income and decumulation.
As populations age worldwide, retirement systems face growing pressure. This year’s index highlights the need for clear objectives, prioritising the funding of future retirement obligations, and building flexibility into pension products and retirement age structures.
Room for Improvement Remains
Jenkins indicated that adequacy was the main area for improvement. Moderating the assets test for the means-tested Age Pension could lift net replacement rates for average-income earners.
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“Australia should also continue focusing on retirement income as the primary purpose of superannuation, while encouraging higher household savings and lower household debt,” he said.
Australia was one of five systems to improve their grade this year, alongside the UAE, Oman, Panama, and China. The average value for the overall index rose 1.1 points from 2025.
Global Challenges and Responses
This year’s index examined how ageing populations will shape pension systems.
“The data shows that even the best-performing systems need to keep evolving; no system can afford to stand still,” Jenkins said.
Pat Tomlinson, president and CEO of Marsh People and Investments, emphasized the impact of increasing longevity on individuals and societies.
The study found that traditional retirement ages of 60 or 65 are becoming misaligned with longer, healthier lives. The rise of gig and part-time work further blurs the boundary between work and retirement.
