Blackrock chief executive Larry Fink has lauded Australia’s superannuation system, saying people tend to underestimate the size of the pool of money individuals need for a dignified retirement.

While Fink acknowledged the arguments growing louder for pausing or dialing-down compulsory savings in light of static wage growth and economic uncertainty, he said the superannuation system has “worked”.

“I am aware of all the arguments,” Fink said in reference to the economic rational for abandoning super during an interview hosted by the Financial Services Council on Tuesday.

“Australia is more prepared than almost any country in the world,” Fink, who leads the $10.2 trillion US funds manager, said.

Fink commented on the local government’s decision to allow members access to their retirement savings under the early release scheme announced in March, noting the dint it will likely put in some peoples’ retirement savings.

“I hope people who have withdrawn that money have adequate savings to retire,” he said

While the political debate continues to roll on relating to freezing, continuing or reversing the superannuation guarantee limit in light of the efficiency and performance of the system, Australia continues to be a model for other retirement savings systems globally.

The compulsory nature of the local system’s contributions factored into Australia’s high ranking in the annual Mercer CFA Institute Global Pension index, according to David Knox, partner at Mercer and author of the annual Mercer CFA Institute Global Pension Index.

Knox was interviewed on the topic along with Maria Wilton who is vice chair of the CFA institute recently as part of Investment Magazine’s Market Narratives podcast series.

The global pensions index is a measurement of adequacy, sustainability and integrity of 39 retirement systems around the world using more than 50 indicators, Know explained.

In 2014, Australia’s ranking peaked with a score of 79.9 per cent. This year it moved from third place (an overall score of 75.3 in 2019) to fourth place (74.2) – outranked by Israel, a newcomer this year to the index.

Each of the three countries ranked above Australia in the index this year – The Netherlands, Denmark and Israel – have contribution rates into their funded pension arrangements of 12 per cent or higher.

Smith is head of content and managing editor of Professional Planner and Investment Magazine.
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