Informed Superannuation Choice: Constraints and Policy Resolutions

Kerry Brown, Gerry Gallery and Natalie Gallery
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Kerry Brown: Queensland University of Technology
Gerry Gallery: University of New South Wales
Natalie Gallery: University of Sydney

Economic Analysis and Policy, 2002, vol. 32, issue 1, 71-90

Abstract: The latest controversy to emerge in Australia's ever-changing superannuation system is the failure of the proposed "member choice of fund" legislation. While superannuation choice continues to be widely supported, the debate lacks coherent policy direction. This paper addresses the policy hiatus by developing a framework to systematically examine endogenous and exogenous constraints affecting the achievement of informed choice, members' choice preferences and associated policy resolutions. Applying this framework, we argue that a genuine choice of fund model should cater for active and passive choice, where passive choice applies to fund members who, for various reasons, are unwilling or unable to make active choices. Appropriate education programs and standardised disclosure are identified as critical prerequisites to enable informed choice by those members who want to actively participate in the management of their superannuation savings. To protect the interests of passive choice members, we recommend the option of a government-regulated universal default fund (UDF).

JEL-codes: H55 J32 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (8)

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