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8 October 2025
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In September 2019, Treasurer Josh Frydenberg announced the Retirement Income Review, with a public consultation paper to be released in November 2019 and a final report to the Government by June 2020. One of the three panel members is Dr Deborah Ralston, who in her previous roles, has written several articles for Firstlinks.
As a general guide to what Dr Ralston may be thinking, we republish an article from 2013. At the time, she was Executive Director of the Australian Centre for Financial Studies (ACFS), which published the Pension Index in conjunction with Mercer. We have often republished past articles by leading authors, accepting that their thoughts may have developed further.
ACFS is now the Monash Centre for Financial Studies, which is part of Monash Business School. Coincidentally, the 2019 Melbourne Mercer Global Pension Index has just been released, linked here, ranking Australia third in the world, behind only The Netherlands and Denmark, as we were six years ago.
The release of the latest Melbourne Mercer Global Pension Index earlier this month once again confirmed Australia as having a world class retirement system, coming in third out of 20 countries behind Denmark and The Netherlands.
In the past, employees lucky enough to be in a defined benefit scheme (and the majority weren’t) were guaranteed a retirement pension traditionally linked to their years of service and salary. But with the advent of compulsory superannuation in 1992 and defined contribution schemes, the onus shifted to the individual to be responsible for their retirement income.
What do these retirees seek? The report identifies the ongoing financial needs of retirees as a 'trilemma' which includes:
Quite obviously, this combination of different needs facing individuals over the course of their retirement means there is no ideal solution. Even an indexed annuity will not meet every individual’s varying financial needs during their different stages of retirement.
This is indeed a complex problem and the best solution for any individual will depend on a range of factors including their total wealth, health and likely longevity, required standard of living, access to the age pension, etc. At the same time, the needs of individuals must be balanced with the public interest so that clear incentives are in place to encourage personal responsibility and avoid over-reliance on the public purse.
For the industry, legislators and administrators, how to solve the trilemma will be the issue in the coming years. So what’s required? The industry needs to provide the right products for an income stream – a portfolio of products that meet individual needs. This portfolio should include features such as:
People need to be educated about retirement, in particular the need to focus on consumption and not investment; it is a quite different phase to the accumulation stage. Research shows that people are typically happier in retirement, but in the immediate years preceding it worry about what will happen and, significantly, often fail to plan for it. The onus has to be on superannuation funds to invest more resources in educating their members about retirement – to literally change their mindsets.
For this to happen the government of the day has to articulate the main objectives of the retirement income system (including the role of the pension). It’s an issue that will encompass social, economic and tax policies and will require strong leadership, coupled with an energetic public debate, to ensure we get the policy architecture right.
Ideally, while the issue can’t be ignored, any policy changes regarding post-retirement income for DC funds will involve an inclusive public debate and a gradual introduction to allow those affected to adjust their expectations and make long-term plans.
Australia has an enormous opportunity to build a world-class decumulation system that gives individuals security and flexibility in retirement. But it will not be easy. The media furore and public angst that preceded the Labor Government’s April 5 statement this year when changes to the tax laws governing superannuation were being mooted highlights the political difficulties. But the longer we delay this debate, the harder it will get – politically, socially and economically.
At the time of writing this article in 2013, Professor Deborah Ralston was Executive Director of the Australian Centre for Financial Studies (now Monash Centre for Financial Studies, which is part of Monash Business School). It publishes the Global Pension Index in conjunction with Mercer. Prior to her appointment on the panel for the Retirement Income Review, Dr Ralston was Chair of the SMSF Association.
Just keep the government out of it and the majority of us will be fine!
Australia has an enormous opportunity to build a world-class decumulation system that gives individuals security and flexibility in retirement, but it's different from the accumulation phase.
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An explosion in low-skilled migration to Australia has depressed wages, killed productivity, and cut rental vacancy rates to near decades-lows. It’s time both sides of politics addressed the issue.
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Australian housing’s 50-year boom was driven by falling rates and rising borrowing power — not rent or yield. With those drivers exhausted, future returns must reconcile with economic fundamentals. Are we ready?
Younger Australians think they’ll need $100k a year in retirement - nearly double what current retirees spend. Expectations are rising fast, but are they realistic or just another case of lifestyle inflation?
This week, I got the news that my mother has dementia. It came shortly after my father received the same diagnosis. This is a meditation on getting old and my regrets in not getting my parents’ affairs in order sooner.
On every valuation metric, the US appears significantly more expensive than Australia. However, American companies are also much more profitable than ours, which means the ASX may be more overvalued than most think.
Government spending is out of control and there's little sign that Labor will curb it. We need enforceable rules on spending and an empowered budget office to ensure governments act responsibly with taxpayers money.
The idea of stopping work during your sixties is a man-made concept from another age. In a world where many jobs are knowledge based and can be done from anywhere, it may no longer make much sense at all.
The tech giants are in a money-throwing contest to secure AI supremacy and may fall short of high investor expectations. The companies supplying this arms race could offer a more attractive way to play AI adoption.
Whether for yourself or a family member, it’s never too early to start thinking about aged care. This looks at the best ways to plan ahead, as well as the changes coming to aged care from November 1 this year.
ESG investing has fallen out of favour with many investors, and Trump's anti-green policies haven't helped. Yet, renewables investment is still surging, which could prove a boon for infrastructure companies.
From buying the whole market to controlling emotions, John Bogle’s legendary advice reminds investors that patience, discipline, and low costs are the keys to investment success in any market environment.