Individual retirees face a daunting task when they consider how best to invest their accumulated superannuation account and non-superannuation savings. This article highlights the fact that there is rarely an obvious decision in this choice and that the optimal decision depends on a number of factors. These factors include the valuation criterion adopted, the level of benefits, the individual's income level, the means-tests, the tax rates on income and superannuation benefits and the person's life expectancy. The optimal behaviour at retirement is significantly affected by the individual characteristics of relative lifetime earnings and post-retirement rates of mortality. Copyright 1995 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.
This paper compares the lifetime redistribution and progressivity, within a cohort of males, of two retirement income systems. The current government strategy in Australia is to increase the role of occupational superannuation and maintain a means‐tested age pension. The Institute of Actuaries of Australia has recommended a universal pension with a corresponding smaller role for occupational superannuation. In terms of lifetime inequality and progressivity measures, it is found that there is not a substantial difference between the two systems. Other issues, such as the benefit choice at retirement and differential mortality, are found to be more important in determining the lifetime redistributive impact of a retirement income strategy.
Governments in many developed economies provide private pension plans with significant taxation incentives. However, as many retirement income systems are now being reviewed due to demographic, social and economic pressures, these taxation arrangements are also under scrutiny. This paper discusses some of the implications of the differences between the traditional taxation treatment adopted by most OECD nations and that adopted by Australia, where there is a tax on contributions, a tax on investment earnings and a tax on benefits. The results show that there are significant differences in the net value of the benefits received by individuals and the taxation revenue received by the government. On the other hand, it is shown that there is remarkably little to distinguish between the two tax structures in terms of summary measures of lifetime income, although the form in which the benefit is taken in retirement is significant in influencing intragenerational equity.JEL classification: D31, E27.
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