Australia needs to loosen the limits on the Age Pension assets test to allow average workers greater income in retirement, according to the Melbourne Mercer Global Pension Index (MMGPI).
In the words of the report, a worthwhile reform would be “moderating the asset test on the means-tested Age Pension to increase the net replacement rate for average-income earners”.
The ‘replacement rate’ is the amount of a worker’s final annual income that they will receive as a pension.
For example, a worker on $100,000 a year at retirement who then receives an annual income of $75,000 would be a replacement rate of 75 per cent.
