Retirement Security

Has Evolved

There was a time when the job market looked very different to how it does now. Not so long ago, a greater share of workers toiled away under the safety net cast by pensions that guaranteed annual payouts for life. Those pension plans that were the bedrock of financial security, giving people a secure retirement after years toiling away.

The Pension Promise

Pensions, also known as defined benefit plans simply offered whatever the same dollar amount of money you would get per month when retire based on how much service time worked and highest pay wage. A system which allowed employees to be able to make plans, knowing they would not fall into poverty in old age.

Decline of Traditional Pensions

But that was before the tide began to turn over subsequent decades. Global economic shifts, corporate restructuring efforts,and a move towards a more dynamic and unpredictable workforce have driven workers to see the sun literally setting on traditional pension plans as some companies phased them out altogether. Instead, they rolled out 401(k) and other defined contribution plans that shifted the responsibility for funding retirement to workers.

The Challenge of Self-Directed Retirement

Even with the upsides of these new plans, which allowed employees flexibility and investment control- there was also downside. Workers were increasingly on their own in terms of overseeing what happened to account balances when it came time to retire—knowledge- and experience-wise, that wasn’t usually a plus. This left many unprepared for retirement, causing them to be uncertain as to whether their savings would carry the day in terms of supporting their desired lifestyle.

The Need for Reform

The collapse of pensions prompts some questions about the future of retirement security The shrinking number of workers with guaranteed income streams has fueled a call for reforms to shore up and increase retirement benefits. Policymakers, businesses and communities need to join forces to develop innovative solutions that give current as well as future retirees access to the income they so desperately require.

A Vision for the Future

In future, it is hoped that confidence in retirement saving will be restored. Imagining new pension models, equipping everyone with basic financial literacy skills and universal coverage toward adequate retirement plans are some of the paths to shape an inclusive setting with a truly secure old age.

Finally, in the past retirement security was achieved through a defined benefit pension plan that made it easy for workers to retire with predictable income; today society is charged with new ways of seeking retirement security so everyone can have peace and prosperity at an older age. The road to a more stable retirement for older Australians remains long but full of opportunities for reform and improvements.