Countries around the globe have been making changes to their pension legislation in recent months as they attempt to balance aging populations, increasing longevity and burdensome deficits.
Australia raises employers’ mandatory contributions
Australia is increasing employers’ mandatory pension contributions under the Superannuation Guarantee. The increase, to be phased in between July 2013 and July 2019, will rise to 12% from 9% of employees’ earnings (up to a specified ceiling).
Other key pension measures introduced in Australia include the following:
- a government superannuation contribution of up to $500 for people earning less than AUD$37,000 for the year, starting July 1, 2012; and
- the abolition of the maximum age limit for employer contributions, starting July 1, 2013.
A reduction to the government’s co-contribution (a matching contribution for low-and medium-income earners who choose to do their own savings) is proposed but is not yet law.
The Australian government says the changes are projected to generate an additional $10 billion by 2020 and $35 billion by 2035 in private savings each year.
Europe raises retirement ages
Canada isn’t the only country increasing its national retirement age. Many European countries are adopting similar tactics in an effort to fund an aging population.
In France, the legal retirement age will become 62 in 2017. (Previously, it was scheduled to reach 62 in 2018.)
Italy will progressively increase the retirement age to 66 for men and 62 for women. Similarly, the service requirements will be increased to 42 years for men and 41 for women in 2012. Incentives to keep working until age 70 were also announced, and the retirement age for women will ultimately be aligned with that for men.
In the U.K., the state pension age will increase to 66 from 65 for both men and women by October 2020. The country then plans to increase the pension age to 67 by April 2028—eight years earlier than previously planned.