Universal Pensions in Australia

Australia has an employer-provided pension system where employers are required to contribute nine percent of workers’ pay either to a traditional defined benefit pension plan or a defined contribution plan. Most employers choose defined contribution plans. All workers are covered, except low-income workers and workers under age 18 or over 70.

Employees can choose to have their money invested in mutual funds or other options offered by financial institutions. Retirees can take their pensions as lump sums or lifetime payments. Most choose lump-sum payouts.

This mandatory pension plan, which is known as the superannuation guarantee (or “super”), is provided as a supplement to a national “age pension” that provides the same amount to all employees who meet certain income and asset tests. The age pension, funded through taxes, is designed to alleviate poverty. It pays a minimum benefit equal to approximately 25 percent of average wages.

For more information about the age pension.