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Developments in Retirement Provision: Global Trends and Lessons from Australia and the US

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  • Olivia S. Mitchell
  • John Piggott

Abstract

Retirement systems should be conceived of as long-term financial contracts under which workers' contributions today are exchanged for benefits paid to the elderly tomorrow. Such contracts are said to be well-managed if the transactions are handled in an affordable, reliable, and efficient manner. Yet all pension systems are forced to operate under a multitude of constraints including participants' ability and willingness to save; the availability of assets with which to convert current saving into future retirement benefits; the limitations of imperfect capital markets; political influences imposed by stakeholders; county macroeconomic conditions; and as we are becoming increasingly aware, global business cycles. If pensions are to continue to meet the needs of an aging world, it is imperative to prepare for emerging challenges as these systems evolve through time. In these remarks we first show how global demographic change is driving pension change throughout the world. Next we describe and compare developments in old-age provision over the last decade in Australia and the United States, and outline the key issues facing retirement systems in both nations. There are many differences between the experiences of the two countries, but as we shall show there are also common themes. Finally we identify key pension reform design issues facing Australia and the US in the upcoming decades.

Suggested Citation

  • Olivia S. Mitchell & John Piggott, 2000. "Developments in Retirement Provision: Global Trends and Lessons from Australia and the US," Center for Financial Institutions Working Papers 00-07, Wharton School Center for Financial Institutions, University of Pennsylvania.
    • Handle: RePEc:wop:pennin:00-07
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    File URL: http://fic.wharton.upenn.edu/fic/papers/00/0007.pdf
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    References listed on IDEAS

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    1. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324, Elsevier.
    2. Hazel Bateman & John Piggott, 1997. "Private Pensions in OECD Countries: Australia," OECD Labour Market and Social Policy Occasional Papers 23, OECD Publishing.
    3. Hazel Bateman & John Piggott, 1999. "Mandating Retirement Provision: The Australian Experience," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 24(1), pages 95-113, January.
    4. Robert Myers, 1999. "Social Security," North American Actuarial Journal, Taylor & Francis Journals, vol. 3(4), pages 59-63.
    5. Olivia S. Mitchell, 1998. "Social security reform in Latin America," Review, Federal Reserve Bank of St. Louis, issue Mar, pages 15-18.
    6. Olivia S. Mitchell & Robert S. Smith, "undated". "Public Sector Pension Funding," Pension Research Council Working Papers 94-4, Wharton School Pension Research Council, University of Pennsylvania.
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    Cited by:

    1. Diana Warren & Umut Oguzoglu, 2010. "Retirement in Australia: A Closer Look at the Financial Incentives," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(4), pages 357-375, December.
    2. Gerrans, Paul & Clark-Murphy, Marilyn, 2004. "Gender differences in retirement savings decisions," Journal of Pension Economics and Finance, Cambridge University Press, vol. 3(2), pages 145-164, July.

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