There are three components of the Australian pension system. The first, a government component, consists of a tax-funded pension that provides the basis for allowance. The second component is a foundation of the Australian pension system that consists of an individual funded pension granted for seniority. The third component includes pension funds and insurance companies.
First level
Employment history and place of work do not matter; state pension is paid even to those who have never worked in their life. The payment amount depends on marital status, number of dependent children, annual income amount and availability of own property.
Second level
Employers are required to pay 9% of the employee’s salary to a private pension fund or insurance company, provided that the employee is over 18 years old and works more than 30 hours a week. Australian Government is currently considering raising compulsory contributions to 12% as of 2025.
Third level
The state stimulates voluntary deductions of Australians.
Analysts believe that the second level of the Australian PS is not systematized. When changing jobs, people often forget to transfer money to the new employer fund. According to the Australian regulator, 10 billion duplicate accounts have been currently identified, on which $2.6 billion is accumulated annually. In the nearest future, the authorities will consolidate these funds with the owners’ accounts.
The changes in regulation of pension funds are also expected. Experts believe small inefficient funds should be combined.
Photos are from open sources.
