Risky by Design: The Mandatory Private Pillar of Australia's Retirement Income System
Australia's retirement income system has been touted by some as among the world's best. Its contemporary architecture mirrors the ‘ideal’ recommended by the World Bank. Yet occupational superannuation, the mandatory private pillar of Australia's retirement income system, is one to which many uncertainties and, hence, risks are attached almost by design. This article explores some of these systemic risks in light of the impact of the global financial crisis (GFC) and its aftermath and considers some of their implications. The range of risks includes inflation risk, malfeasance and incompetence in the management of superannuation funds, exchange rate risk, investment risk, longevity risk and political risk. However, this article focuses on the latter three. While Australia's federal governments have become increasingly conscious of investment risk and longevity risk, greater sensitivity to political risk and its impacts is still needed.