IDEAS home Printed from https://ideas.repec.org/a/bla/ecorec/v100y2024i331p533-567.html
   My bibliography  Save this article

Interaction Between Age Pension Means Testing and Innovative Income Streams in Australia

Author

Listed:
  • Wenqi Ai
  • Adam Butt
  • Gaurav Khemka

Abstract

We investigate the interaction between Age Pension means testing and innovative income streams in Australia, considering the use of an investment‐linked annuity that allows a choice of drawdown level. We find that current means testing arrangements incentivise a very specific usage of investment‐linked annuities that is not materially impacted by individual characteristics or fees, due to incoherencies across the income test and assets test. We investigate alternative means test structures, including a structure that includes only an income test and incorporates capital consumption by adjusting taper rates with age according to an annuitisation schedule. This structure removes the distortions impacting annuity usage, generates the most stable Age Pension over lifetime, encourages drawdown of assets over retirement and more accurately reflects the means of retirees to generate an income at each age.

Suggested Citation

  • Wenqi Ai & Adam Butt & Gaurav Khemka, 2024. "Interaction Between Age Pension Means Testing and Innovative Income Streams in Australia," The Economic Record, The Economic Society of Australia, vol. 100(331), pages 533-567, December.
    • Handle: RePEc:bla:ecorec:v:100:y:2024:i:331:p:533-567
    DOI: 10.1111/1475-4932.12832
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/1475-4932.12832
    Download Restriction: no
    File URL: https://libkey.io/10.1111/1475-4932.12832?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecorec:v:100:y:2024:i:331:p:533-567. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/esausea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.