AUSTRALIA RETIREMENT INCOME REVOLUTION - A FINNISH SYSTEM DOWN-UNDER

Most advanced industrial societies are confronting serious economic re cession, and governments are seeking ways to stimulate economic growth and reduce government expenditure. For many countries these problems are compounded by aging populations and demographic changes. There are fewer people in the workforce, and more people in older age groups li ve longer and have increased expectations for retirement lifestyles. T he result has been that many governments are radically transforming th eir systems of retirement income provision, often causing political, e conomic and social upheaval and widespread public anxiety. Australia i s one country in which there have been huge changes in the retirement income system in the past 5 years. The system has been substantially p rivatized, and future retirement income will come from statutorily enf orced earnings-related individual savings accumulated in decentralized private funds. Australia's new retirement income regime bears extraor dinary similarities to the Finnish system of employment-related pensio ns, yet there was no reference to the Finnish system in the evolution of the new Australian system. There are lessons for Australia and for other countries in the long and successful operation of the Finnish pe nsion system. This article first examines Australia's retirement incom e system, recent government policy changes and likely implications of these retirment policy changes for the future of Australia's tradition al welfare state. Cross-national comparisons of the retirement income regimes in Finland and Australia, identifying international best pract ice in each country comprise the second half of the article. Such comp arisons will be of interest to policy-makers seeking new policy direct ions.