Australia’s Retirement Income System: Implications for Saving and Capital Markets
AbstractAustralia 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.
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Bibliographic InfoPaper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp9603.
Date of creation: Sep 1996
Date of revision:
Other versions of this item:
- Malcolm Edey & John Simon, 1996. "Australia's Retirement Income System: Implications for Saving and Capital Markets," NBER Working Papers 5799, National Bureau of Economic Research, Inc.
- 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, Technological Change, and Growth - - Economywide Country Studies - - - Oceania
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