Some Policy Issues in Providing Retirement Incomes
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.
|Date of creation:||Feb 2007|
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- Creedy, John & van de Ven, Justin, 2000.
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University of Manchester, vol. 68(5), pages 539-551, September.
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- Lindbeck, Assar & Persson, Mats, 2002. "The Gains from Pension Reform," Seminar Papers 712, Stockholm University, Institute for International Economic Studies.
- 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.
- 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.
- Freebairn, John, 1998. "Compulsory Superannuation and Labour Market Responses," Australian Economic Papers, Wiley Blackwell, vol. 37(1), pages 58-70, March.
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