Australia’s pension system endorsed by OECD

A new report from the Organisation for Economic Co-operation and Development (OECD) has confirmed Australia has a secure, sustainable and adequate pension system.

The report, Pensions at a Glance 2011, examined the pension systems of 42 countries.

Australia’s age pension is more generous, relative to average earnings, than the OECD average of targeted payments, and more generous than similar payments in countries such as the United States, the United Kingdom, France, Germany and Italy.

The report singles out Australia’s pension system as having amongst the widest coverage in the OECD, with around 80 per cent of Australian retirees receiving a pension.

Across the developed world, countries are facing the future challenges of an ageing population and the OECD report shows Australia is well-equipped to meet this challenge.

The report also confirms that Australia’s pension system is sustainable into the future, with expenditure in Australia projected to rise to 4.9 per cent of GDP in 2050, compared to a projected OECD average of 11.4 per cent of GDP in 2050.

In September 2009, the Australian Government delivered the most significant reforms to the pension system in its 100 year history. These reforms delivered pension increases, a new pension supplement, a pension Work Bonus and a new indexation system.

From this Sunday, over three million Australian age, disability and carer pensioners, and veterans’ income support recipients will receive another increase in their pensions to help keep up with the cost of living.

On their first payment date after 20 March this year, a single pensioner on the maximum rate will receive an extra $13.20 a fortnight, and couples combined on the maximum rate will receive an increase of $19.80 a fortnight.

Since the Australian Government’s reforms began in September 2009, the pension has increased by $128 per fortnight for singles on the maximum rate and $116 for couples combined on the maximum rate.

The OECD report confirms the Australian Government’s important reforms have made the pension system sustainable for the millions of age and disability pensioners, carers and veterans who depend on it.