Australia’s Retirement Income System: Implications for Saving and Capital Markets

Malcolm Edey and John Simon
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Malcolm Edey: Reserve Bank of Australia

RBA Research Discussion Papers from Reserve Bank of Australia

Abstract: Australia is in the early stages of introducing a system of self-provision for retirement through mandatory contributions to private superannuation funds. For most employees, the scheme will eventually replace, either fully or partially, the government age pension, currently relied upon by a large majority of retirees. The scheme has been implemented reasonably smoothly by building on existing financial infrastructure for voluntary superannuation. This paper summarises the historical background of mandatory superannuation in Australia, reviews its potential impact on saving and capital markets, and highlights some remaining policy issues. Perhaps the most important of these is the impact of the system on retirement decisions. A number of features of the system contribute to incentives favouring early retirement and continued reliance on the government pension. Also important is the increasing complexity of the system, a result of the layering of rule changes and grandfathering of existing rights at each stage of the process.

JEL-codes: E21 G23 G28 H55 O56 (search for similar items in EconPapers)
Date: 1996-09
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https://www.rba.gov.au/publications/rdp/1996/pdf/rdp9603.pdf (application/pdf)

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Working Paper: Australia's Retirement Income System: Implications for Saving and Capital Markets (1996)
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Persistent link: https://EconPapers.repec.org/RePEc:rba:rbardp:rdp9603

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