Choices and Constraints over Retirement Income Streams: Comparing Rules and Regulations
AbstractThe new Simplified Superannuation regulations for Australian superannuation provide tax concessions to retirement income streams which comply with legislated minimum drawdown rules. We evaluate these new drawdown rules against four alternatives, including three formula-based 'rules of thumb' used by financial planners. We find that the new regulations are a substantial improvement on the previous rules for allocated pensions and, when compared with the formula-based rules, are a good compromise in terms of simplicity, adequacy and risk. We also find that welfare is lower for most individuals who follow the Simplified Superannuation rules compared with welfare under an optimal path or a simple fixed percentage drawdown rule, but that outcomes could be improved through a further simplification of the new rules. Copyright © 2008 The Economic Society of Australia.
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Bibliographic InfoArticle provided by The Economic Society of Australia in its journal Economic Record.
Volume (Year): 84 (2008)
Issue (Month): s1 (09)
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Other versions of this item:
- Hazel Bateman & Susan Thorp, 2007. "Choices and constraints over retirement income streams: comparing rules and regulations," Discussion Papers 2007-29, School of Economics, The University of New South Wales.
- Hazel Bateman & Susan Thorp, 2007. "Choices and Constraints over Retirement Income Streams: Comparing Rules and Regulations," Research Paper Series 200, Quantitative Finance Research Centre, University of Technology, Sydney.
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