Macroeconomic and Welfare Effects of the 2010 Changes to Mandatory Superannuation
George Kudrna () and
Alan Woodland ()
No 201210, Working Papers from ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales
In this paper we investigate the macroeconomic and welfare effects of the major changes of the mandatory superannuation reform proposed in the 2010-11 Australian federal budget. These changes include gradual increases in the mandatory employer contributions from 9 to 12 percent of gross earnings and a policy that effectively removes the concessional 15 percent tax on mandatory contributions for workers with annual taxable income of up to $37,000. Using a computable overlapping generations model that incorporates main aspects of mandatory superannuation, the means tested age pension and progressive personal income taxation, we find significantly larger superannuation asset accumulations as a result of the reform, which generate increases in domestic total assets and household saving. The reform improves self-funding in retirement, with government expenditures on the age pension falling by almost 4.6 percent in the long run. The reform also has positive impacts on households' long run welfare, with higher income households solely benefiting from the increased superannuation contributions while lower income households from the contribution tax removal. The aggregate efficiency calculations indicate that the superannuation reform improves efficiency, generating a gain of almost 0.8 percent or $11,753 in initial resources for each future generation.
Keywords: Compulsory saving; pension reform; dynamic OLG model (search for similar items in EconPapers)
JEL-codes: H55 E21 C68 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-age and nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://cepar.edu.au/media/78193/macroeconomic_and_ ... ects_of_the_2010.pdf First version, 2012 (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found
Journal Article: Macroeconomic and Welfare Effects of the 2010 Changes to Mandatory Superannuation (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:asb:wpaper:201210
Access Statistics for this paper
More papers in Working Papers from ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales Contact information at EDIRC.
Bibliographic data for series maintained by Elena Capatina (). This e-mail address is bad, please contact .