IDEAS home Printed from https://ideas.repec.org/p/rba/rbardp/rdp9603.html
   My bibliography  Save this paper

Australia’s Retirement Income System: Implications for Saving and Capital Markets

Author

Listed:
  • Malcolm Edey

    (Reserve Bank of Australia)

  • John Simon

    (Reserve Bank of Australia)

Abstract

Australia is in the early stages of introducing a system of self-provision for retirement through mandatory contributions to private superannuation funds. For most employees, the scheme will eventually replace, either fully or partially, the government age pension, currently relied upon by a large majority of retirees. The scheme has been implemented reasonably smoothly by building on existing financial infrastructure for voluntary superannuation. This paper summarises the historical background of mandatory superannuation in Australia, reviews its potential impact on saving and capital markets, and highlights some remaining policy issues. Perhaps the most important of these is the impact of the system on retirement decisions. A number of features of the system contribute to incentives favouring early retirement and continued reliance on the government pension. Also important is the increasing complexity of the system, a result of the layering of rule changes and grandfathering of existing rights at each stage of the process.

Suggested Citation

  • Malcolm Edey & John Simon, 1996. "Australia’s Retirement Income System: Implications for Saving and Capital Markets," RBA Research Discussion Papers rdp9603, Reserve Bank of Australia.
    • Handle: RePEc:rba:rbardp:rdp9603
    as

    Download full text from publisher

    File URL: https://www.rba.gov.au/publications/rdp/1996/pdf/rdp9603.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hazel Bateman & John Piggott, 1997. "Private Pensions in OECD Countries: Australia," OECD Labour Market and Social Policy Occasional Papers 23, OECD Publishing.
    2. repec:bla:ecorec:v:61:y:1985:i:174:p:613-21 is not listed on IDEAS
    3. Hazel Bateman & Geoffrey Kingston & John Piggott, 1993. "Taxes, Retirement Transfers, and Annuities," The Economic Record, The Economic Society of Australia, vol. 69(3), pages 274-284, September.
    4. Steven Morling & Robert Subbaraman, 1995. "Superannuation and Saving," RBA Research Discussion Papers rdp9511, Reserve Bank of Australia.
    5. F. H. Gruen, 1985. "Australian Government Policy on Retirement Incomes," The Economic Record, The Economic Society of Australia, vol. 61(3), pages 613-621, September.
    6. Bateman, H. & Piggott, J., 1993. "The Superannuation Guarantee Charge: What Do We Know about Its Aggregate Impact?," Papers 93-6, New South Wales - School of Economics.
    7. Malcolm Edey & Robin Foster & Ian Macfarlane, 1991. "The Role of Superannuation in the Financial Sector and in Aggregate Saving: A Review of Recent Trends," RBA Research Discussion Papers rdp9112, Reserve Bank of Australia.
    8. M. E. Atkinson & John Creedy & D. M. Knox, 1995. "Planning Retirement Income in Australia: Routes through the Maze," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 28(4), pages 15-28, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Glismann, Hans H. & Horn, Ernst-Jürgen, 1997. "Towards a funded system of social security: Design and implications - The case of Germany -," Kiel Working Papers 836, Kiel Institute for the World Economy (IfW Kiel).
    2. Srinivas, P.S. & Whitehouse, Edward & Yermo, Juan, 2000. "Regulating private pension funds'structure, performance, and investments : cross-country evidence," Social Protection Discussion Papers and Notes 23302, The World Bank.
    3. Olivia S. Mitchell, "undated". "Developments in Pensions," Pension Research Council Working Papers 98-4, Wharton School Pension Research Council, University of Pennsylvania.
    4. Garry F. Barrett & Yi-Ping Tseng, 2008. "Retirement Saving in Australia," Canadian Public Policy, University of Toronto Press, vol. 34(s1), pages 177-193, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Malcolm Edey & Brian Gray, 1996. "The Evolving Structure of the Australian Financial System," RBA Research Discussion Papers rdp9605, Reserve Bank of Australia.
    2. M.E. Atkinson & John Creedy & D.M. Knox, 1996. "Alternative Retirement Income Strategies: A Cohort Analysis of Lifetime Redistribution," The Economic Record, The Economic Society of Australia, vol. 72(217), pages 97-106, June.
    3. Deborah A. Cobb‐Clark & Vincent A. Hildebrand, 2011. "Portfolio Allocation In The Face Of A Means‐Tested Public Pension," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(3), pages 536-560, September.
    4. Villa, Miguel & Rivadeneira S., Luis, 1999. "El proceso de envejecimiento de la población en América Latina y el Caribe: una expresión de la transición demográfica," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34671, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Carvalho, José Alberto Magno de & Andrade, Flávia Cristina Dumond, 1999. "Envejecimiento de la población brasileña: oportunidades y desafíos," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34673, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    6. Mariangela Bonasia & Oreste Napolitano, 2006. "The Impact of Privatisation of Pension System on National Saving: The Case of Australia and Iceland," Discussion Papers 3_2006, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
    7. eccleston, richard & Verdouw, Julia & Flanagan, Kathleen & Warren, Neil & Duncan, Alan & Ong, Rachel & Whelan, Stephen & Atalay, Kadir & Hayward, Richard Donald, 2018. "Pathways to housing tax reform," SocArXiv 8xrbe, Center for Open Science.
    8. Chackiel, Juan, 1999. "El envejecimiento de la población latinoamericana: ¿hacia una relación de dependencia favorable?," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34684, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    9. Arenas de Mesa, Alberto, 1999. "El sistema de pensiones en Chile: resultados y desafíos pendientes," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34692, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    10. John Creedy & Richard Disney, 1989. "The Australian Pension Scheme: Some Basic Analytics," The Economic Record, The Economic Society of Australia, vol. 65(4), pages 357-368, December.
    11. James Obben & Monique Waayer, 2011. "New Zealand's old‐age pension scheme and household saving," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 38(9), pages 767-788, August.
    12. Malcom Edey & Brian Gray, 1996. "The Evolving Structure of the Australian Financial System," RBA Annual Conference Volume (Discontinued), in: Malcom Edey (ed.),The Future of the Financial System, Reserve Bank of Australia.
    13. Robine, Jean Marie, 1999. "Extending human life: longetivy and quality of life," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34675, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    14. Akshay Shanker & Sacha Vidler, 2014. "Offsets to compulsory superannuation: do people consciously choose their level of retirement saving?," CAMA Working Papers 2014-65, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    15. Ramos, Luiz Roberto, 1999. "Saúde do idoso no Brasil," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34679, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    16. Olivia S. Mitchell & John Piggott, "undated". "Developments in Retirement Provision: Global Trends and Lessons from Australia and the US," Pension Research Council Working Papers 2000-2, Wharton School Pension Research Council, University of Pennsylvania.
    17. Ayala, Ulpiano, 1999. "El sistema pensional colombiano," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34690, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    18. Karunarathne, Wasana & Abeysinghe, Tilak, 2005. "Does mandatory pension savings crowd out private savings?: The experience of Sri Lanka," Journal of Asian Economics, Elsevier, vol. 16(5), pages 830-846, October.
    19. Corinne Cortese, 2006. "Taxation and the Australian Superannuation System: An International Comparison," Australian Accounting Review, CPA Australia, vol. 16(39), pages 77-85, July.
    20. Golini, Antonio, 1999. "Situation and outlook of ageing in an advanced demographic transition country: the case of Italy," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 34674, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania

    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:rba:rbardp:rdp9603. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Paula Drew (email available below). General contact details of provider: https://edirc.repec.org/data/rbagvau.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.