ANNUAL REVIEW - Australian Centre For Financial Studies

Melbourne Mercer
Global Pension Index
PAUL COSTELLO
In March 2009, Mr John Lenders MP
the Treasurer of Victoria and Minister for
Financial Services, announced MCFS
has been contracted by the Victorian
Government to undertake a pilot study
to compare pension and superannuation
systems on an international basis.
MCFS has sub-contracted key elements to
Mercer in Melbourne which in turn is drawing
on its global network for data collection
and validation. The study will result in the
production of the Melbourne Mercer Global
Pension Index (the Index).
The study will highlight the relative
merits of national superannuation and
pension systems, both public and private,
and their capacity to meet the long term
retirement needs of each country’s
population. Such a study however, is not
without challenges. Comparing retirement
systems is sure to be controversial as every
system is different and has arisen from
each country’s particular economic, social,
cultural, political and historic circumstances.
Consequently there is no perfect system that
can be applied universally.
Having recognised these constraints,
the pilot study will undertake a comparison of
retirement systems in 11 countries: Australia,
Canada, Chile, China, Germany, Japan,
the Netherlands, Singapore, Sweden, the
United Kingdom and the United States of
America. The countries have been chosen
to provide a robust comparative sample of
well established and emerging systems.
Data will be drawn primarily from OECD and
other official sources and supplemented by
in-country data collected and validated by
an international network of Mercer pension
specialists.
The Index is constructed from three
sub-indices: benefits, sustainability and
integrity. While the central purpose of a
retirement scheme is to provide benefits,
which are therefore accorded a greater
weighting in the Index, it also needs to be
sustainable in terms of the economy and
government’s ability to deliver benefits into
the future.
The final sub-indice measures the
integrity of each system in terms of the
regulatory oversight and governance of
private pension funds.
In developing the Index, MCFS has
brought together a reference group of
senior industry and academic experts to
oversee the study and sought input from
authorities such as the World Bank, the
OECD and the International Centre for
Pension Management at Rotman University
in Canada.
• Syd Bone, Chairman, Melbourne Centre for
Financial Studies
• Jeremy Duffield, Managing Director,
Vanguard Investments Australia
• Dr Vince Fitzgerald, Chairman, Allen
Consulting
• Assoc Prof Roger Gay, Monash University
• Prof Richard Heaney, RMIT University
• Dr David Knox, Worldwide Partner, Mercer
• Assoc Prof Matt Pinnuck, Melbourne
University
• Ian Silk, Chief Executive, Australian Super
They have been joined by occasional
invited experts and by the project team from
MCFS and Mercer.
The Index will be released in mid-
October 2009 and is expected to stimulate
debate and research activity among
policy-makers, regulators and the funds
management community globally.
CASE STUDY 1
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