Hazel Bateman () (School of Economics, The University of New South Wales) Susan Thorp () (School of Finance and Economics, University of Technology, Sydney)
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The 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’ and the previous legislated minimum drawdown limits for allocated pensions. We find that the new regulations are a substantial improvement on the previous rules for allocated pensions and, when compared with the four formula-based rules, are a good compromise in terms of simplicity, a dequacy and risk. We also find that welfare is lower for most individuals who follow the Simplified Superannuation 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 rules.
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Paper provided by School of Economics, The University of New South Wales in its series Discussion Papers with number
2007-29.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Olivia S Mitchell & John Piggott & Michael Sherris & Shaun Yow, 2006.
"Financial Innovation for an Ageing World,"
RBA Annual Conference Volume,
in: Christopher Kent & Anna Park & Daniel Rees (ed.), Demography and Financial Markets
Reserve Bank of Australia.
[Downloadable!]
Thomas Davidoff & Jeffrey R. Brown & Peter A. Diamond, 2005.
"Annuities and Individual Welfare,"
American Economic Review,
American Economic Association, vol. 95(5), pages 1573-1590, December.
[Downloadable!]
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