Means-tested Age-Pension and Saving

Sang-Wook Cho () and Renuka Sane

No 2014-03, Discussion Papers from School of Economics, The University of New South Wales

Abstract: We investigate whether households adjust retirement savings decisions in re-sponse to changes in the means-tested public pension plans. The policy in question lowered the taper rate of the assets test on the age pension in Australia in 2007. We use HILDA, a detailed micro panel data-set for Australian households and focus on the age group between 50 and 64 in 2006, prior to the reform. We compare savings behaviours of those who were constrained to increase financial wealth because of the assets test prior to the reform with those who were not constrained, and find that assets tests do have a perverse impact on saving.

Keywords: means test; age pension; savings; portfolio choice (search for similar items in EconPapers)
JEL-codes: H55 J14 J26 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-01
New Economics Papers: this item is included in nep-age
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Citations: View citations in EconPapers (3)

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