The Effect of the Australian Superannuation Guarantee on Household Saving Behaviour
Individual pension accounts are growing in importance as a pillar of retirement incomes policy in the developed world. Policy-makers have generally assumed that by introducing pre-funded pension schemes, they can increase household wealth and thereby raise retirement incomes. However, there has been relatively little empirical work to confirm this. This paper focuses on the effect of Australia’s system of compulsory pension accounts, the ‘Superannuation Guarantee’, on household saving behaviour. Microeconomic data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, are used to explore three related questions: i. Have compulsory pension accounts increased household wealth? ii. What effect do compulsory pension accounts have on voluntary saving for retirement? iii. Do compulsory pension accounts influence the timing of retirement? This paper finds that Australia’s compulsory pension accounts increased household wealth. Voluntary saving for retirement in pension accounts also appeared to increase slightly, possibly due to the added convenience of being able to make contributions directly into these pension accounts. Finally, there is no evidence of a significant effect on retirement intentions. Overall, the results suggest that Australia’s compulsory pension accounts have increased household wealth and raised self-funded retirement incomes.
|Date of creation:||Aug 2007|
|Date of revision:|
|Contact details of provider:|| Postal: GPO Box 3947, Sydney NSW 2001|
Web page: http://www.rba.gov.au/
More information through EDIRC
|Order Information:||Web: http://www.rba.gov.au/forms/rdp-order-form/|
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.:
- Gianni La Cava & John Simon, 2003. "A Tale of Two Surveys: Household Debt and Financial Constraints in Australia," RBA Research Discussion Papers rdp2003-08, Reserve Bank of Australia.
- Douglas W. Elmendorf & Jeffrey B. Liebman, 2000. "Social Security Reform and National Saving in an Era of Budget Surpluses," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 1-72.
- Brigitte C. Madrian & Dennis F. Shea, 2000.
"The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior,"
NBER Working Papers
7682, National Bureau of Economic Research, Inc.
- Brigitte C. Madrian & Dennis F. Shea, 2001. "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 116(4), pages 1149-1187.
- James M. Poterba & Steven F. Venti & David A. Wise, 1996. "How Retirement Saving Programs Increase Saving," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 91-112, Fall.
- Samwick, Andrew A., 1998.
"New evidence on pensions, social security, and the timing of retirement,"
Journal of Public Economics,
Elsevier, vol. 70(2), pages 207-236, November.
- Andrew A. Samwick, 1998. "New Evidence on Pensions, Social Security, and the Timing of Retirement," NBER Working Papers 6534, National Bureau of Economic Research, Inc.
- Nikola Dvornak & Marion Kohler, 2007.
"Housing Wealth, Stock Market Wealth and Consumption: A Panel Analysis for Australia,"
The Economic Record,
The Economic Society of Australia, vol. 83(261), pages 117-130, 06.
- Nikola Dvornak & Marion Kohler, 2003. "Housing Wealth, Stock Market Wealth and Consumption: A Panel Analysis for Australia," RBA Research Discussion Papers rdp2003-07, Reserve Bank of Australia.
- Alberto Abadie & David Drukker & Jane Leber Herr & Guido W. Imbens, 2004. "Implementing matching estimators for average treatment effects in Stata," Stata Journal, StataCorp LP, vol. 4(3), pages 290-311, September.
- John Freebairn, 2004. "Some Long-Run Labour Market Effects of the Superannuation Guarantee," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(2), pages 191-197, 06.
When requesting a correction, please mention this item's handle: RePEc:rba:rbardp:rdp2007-08. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paula Drew)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.