A comparative analysis of Australian and Hong Kong retirement systems

Abstract

In the developed world, there comes a point in a person’s life when it is socially accepted that they should no longer be required to earn an income through personal exertion — generally quantitatively determined by their age. The level of support an older person receives is often correlated with the economic stability of the jurisdiction in which they reside. This support can range from basic services through to modest level pensions and healthcare. All support is funded by government revenue (i.e. taxes). Such revenue is predominately derived through taxpayers and, most notably, the working population. A large issue affecting countries globally is that of aging populations. Statistically, older persons are considered to be those over the age of 60. Aging populations are a direct result of increased mortality rates followed by reductions in fertility rates. The financial impact of aging populations is that a large network of people finds themselves being supported by a much smaller network. This places a greater burden on the younger population and risks a lower standard of living for older people.To combat the economic and social risks associated with an aging population, many countries over the past decade have implemented significant pension reforms which have included increasing age requirements for pension benefits, changing the way in which entitlements are calculated and introducing compulsory savings. The World Bank’s leading involvement in pension reform, globally, has identified that the main objectives of a pension system continues to be poverty alleviation and consumption smoothing — beneath the umbrella of social protection. This paper reviews each comparator country’s retirement income system using the World Banks Pension Conceptual Framework. It then considers each country’s system in terms such as adequacy, affordability, sustainability, equitability, predictability and robustness.