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Some Policy Issues in Providing Retirement Incomes

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  • John Freebairn

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

The paper compares and contrasts the pay-as-you-go system of government provided age pensions funded from recurrent tax revenue with the pre-paid system based on a compulsory superannuation levy funding an actuarially fair retirement income. Under special assumptions, including constant levels of GDP, the two systems are similar. However, given specific details of the current Australian versions of these two systems, the second system is shown to result in a higher level of GDP. Some policy design issues for the superannuation scheme, including the need for compulsion and at what rate, who pays the levy and the congruence of various eligibility ages, and the effects of the 2006 budget changes on the taxation of withdrawals, are assessed.

Suggested Citation

  • John Freebairn, 2007. "Some Policy Issues in Providing Retirement Incomes," Melbourne Institute Working Paper Series wp2007n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2007n06
    as

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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2007n06.pdf
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    References listed on IDEAS

    as
    1. Louise Carter, 2005. "Labour Market Responses to the Abolition of Compulsory Superannuation," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(4), pages 351-364, December.
    2. John Creedy & Justin Van De Ven, 2000. "Retirement Incomes: Private Savings versus Social Transfers," Manchester School, University of Manchester, vol. 68(5), pages 539-551, September.
    3. Ross S. Guest, 2004. "Superannuation, Owner-Occupied Housing Demand and Private Saving in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(2), pages 198-204, June.
    4. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    5. Assar Lindbeck & Mats Persson, 2003. "The Gains from Pension Reform," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 74-112, March.
    6. Guest, Ross S & McDonald, Ian M, 2001. "Ageing, Optimal National Saving and Future Living Standards in Australia," The Economic Record, The Economic Society of Australia, vol. 77(237), pages 117-134, June.
    7. Ross Guest & Ian McDonald, 2001. "National Saving and Population Ageing," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 8(3), pages 235-246.
    8. Louise Carter, 2005. "Labour Market Responses to the Abolition of Compulsory Superannuation," Economics Discussion / Working Papers 05-18, The University of Western Australia, Department of Economics.
    9. Ellis Connolly & Marion Kohler, 2004. "The Impact of Superannuation on Household Saving," RBA Research Discussion Papers rdp2004-01, Reserve Bank of Australia.
    10. John Freebairn, 1998. "Compulsory Superannuation and Labour Market Responses," Australian Economic Papers, Wiley Blackwell, vol. 37(1), pages 58-70, March.
    11. Ross S. Guest & Ian M. McDonald, 2001. "Ageing, Optimal National Saving and Future Living Standards in Australia," The Economic Record, The Economic Society of Australia, vol. 77(237), pages 117-134, June.
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    Cited by:

    1. Ross Guest, 2010. "Policy Forum: Saving for Retirement: Policy Options to Increase Retirement Saving in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 293-301, September.

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