Risky by Design: The Mandatory Private Pillar of Australia's Retirement Income System

Australia's retirement income system has been touted by some as among the world's best. Its contemporary architecture mirrors the ‘ideal’ recommended by the World Bank. Yet occupational superannuation, the mandatory private pillar of Australia's retirement income system, is one to whi...

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Bibliographic Details
Published in:Social policy & administration 2013-12, Vol.47 (6), p.749-764
Main Author: Borowski, Allan
Format: Article
Language:English
Subjects:
Australia
Banking
Economic conditions
Economic Crises
Federal Government
Finance
Financial crisis
Foreign exchange rates
Government
Income
Inflation
Investment
Investment risk
Investments
Longevity
Longevity risk
Management
Political risk
Retirement
Retirement benefits
Retirement income
Risk
Risk factors
Risk Management
Superannuation
Values
World Bank
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Summary:Australia's retirement income system has been touted by some as among the world's best. Its contemporary architecture mirrors the ‘ideal’ recommended by the World Bank. Yet occupational superannuation, the mandatory private pillar of Australia's retirement income system, is one to which many uncertainties and, hence, risks are attached almost by design. This article explores some of these systemic risks in light of the impact of the global financial crisis (GFC) and its aftermath and considers some of their implications. The range of risks includes inflation risk, malfeasance and incompetence in the management of superannuation funds, exchange rate risk, investment risk, longevity risk and political risk. However, this article focuses on the latter three. While Australia's federal governments have become increasingly conscious of investment risk and longevity risk, greater sensitivity to political risk and its impacts is still needed.
ISSN:0144-5596
1467-9515
DOI:10.1111/spol.12041