How effective are Matching Schemes in enticing low-income earners to save more for retirement? Evidence from a national scheme

Marc Chan, Cain Polidano (), Ha Vu, Roger Wilkins (), Andrew Carter and Hang To
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Hang To: Australian Taxation Office

Melbourne Institute Working Paper Series from Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Abstract: Concerns over the adequacy of retirement income of low and middle-income earners have led governments to introduce targeted matching schemes to incentivise contributions to private pensions. In this study, we estimate the impacts of a simple Australian scheme, using administrative tax-filer data and exploiting longitudinal changes in eligibility and matching rates. We find modest increases in the proportion of people making contributions, but reductions in average contributions due to dominant negative income effects. We also find stronger income effects among people with low permanent income, possibly reflecting liquidity constraints. Finally, we find asymmetry in the magnitude of responses to changes in the matching entitlement, with decreases eliciting stronger responses than increases. Taken together, our findings cast doubt on the effectiveness of targeted matching schemes to lift retirement savings.

Keywords: Private pension; matching schemes; retirement income; aging population (search for similar items in EconPapers)
JEL-codes: H55 I3 J14 (search for similar items in EconPapers)
Pages: 47pp
Date: 2020-12
New Economics Papers: this item is included in nep-age
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Working Paper: How Effective are Matching Schemes in Enticing Low-income Earners to Save More for Retirement? Evidence from a National Scheme (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:iae:iaewps:wp2020n27

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