One size fits all? Drawdown structures in Australia and The Netherlands

Alonso-García, Jennifer

doi:10.1016/j.jeoa.2018.07.002

Cited by 3 publications

(3 citation statements)

References 51 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…We use Monte Carlo simulation and historical risk-return data for our analysis. This is a standard methodology applied in retirement planning literature (Alonso-Garcia and Sherris, 2019; Bengen, 1994; Ganegoda and Evans, 2015). 3 An individual can expect to live up to 30 years after retirement.…”

Section: Methodsmentioning

confidence: 99%

“…4 His retirement spending is funded by his SA balance, which he invests in a 60/40 (Australian) portfolio and age pension when eligible. 5 While there is no conclusive evidence on which type of retirement product – annuities or equity portfolios, better serves the retirees (Alonso-Garcia and Sherris, 2019; Doyle et al, 2004; Horneff et al, 2010a, 2010b; Milevsky and Kyrychenko, 2008), we focus our analysis on a 60/40 portfolio. The article’s primary goal is to analyse the welfare of the retirees under the current market conditions not to point out the relative benefits of different products.…”

Section: Methodsmentioning

confidence: 99%

See 1 more Smart Citation

The retirement puzzle

Ruthbah

2021

Australian Journal of Management

View full text Add to dashboard Cite

The present-day retirees may not be as well off as they expect to be during their retirement. Given the current state of the world – higher life expectancy, close to zero real interest rate and the economic turmoil caused by Covid-19 pandemic, a superannuation balance as large as $545,000 may not be enough to support a comfortable lifestyle. Besides, the means-tested age pension results in cases where spending at retirement does not increase proportionally with assets, providing incentives for a broad spectrum of people to deplete their superannuation in the early years of retirement, with significant negative consequences for government finances. JEL Classification: G17, G18, G51, H55

show abstract

Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

The retirement puzzle

Ruthbah

2021

Australian Journal of Management

View full text Add to dashboard Cite

show abstract

“…Before retirement, individuals have to make a series of financial decisions including asset allocation and when to retire, and as a result, how much to spend in retirement. At retirement, retirees have to decide whether they purchase an income stream product, such as an annuity (Andreasson & Shevchenko 2019;Alonso-García & Sherris 2019), to mitigate the longevity risk. After retirement, retirees have to choose the optimal consumption or drawdown strategies (Butt & Deng 2012;Callil et al 2018;Zhang 2018;Forsyth et al 2019) and annuitisation strategies for the retirement stage in the DC system with personal bequest objectives (Chen et al in press).…”

Section: Introductionmentioning

confidence: 99%

Using a stochastic economic scenario generator to analyse uncertain superannuation and retirement outcomes

et al. 2020

View full text Add to dashboard Cite

The retirement systems in many developed countries have been increasingly moving from defined benefit towards defined contribution system. In defined contribution systems, financial and longevity risks are shifted from pension providers to retirees. In this paper, we use a probabilistic approach to analyse the uncertainty associated with superannuation accumulation and decumulation. We apply an economic scenario generator called the Simulation of Uncertainty for Pension Analysis (SUPA) model to project uncertain future financial and economic variables. This multi-factor stochastic investment model, based on the Monte Carlo method, allows us to obtain the probability distribution of possible outcomes regarding the superannuation accumulation and decumulation phases, such as relevant percentiles. We present two examples to demonstrate the implementation of the SUPA model for the uncertainties during both phases under the current superannuation and Age Pension policy, and test two superannuation policy reforms suggested by the Grattan Institute.

show abstract

What to offer if consumers do not want what they need? A simultaneous evaluation approach with an application to retirement savings products

2023

View full text Add to dashboard Cite

Standard economic models of rational decision making provide information on how people should decide. In practice, human decisions are influenced by numerous behavioral patterns that lead to systematic deviations from rationally optimal behavior. In the context of retirement savings, this can result in substantial pension gaps, and hence in a reduction of the standard of living in the retirement phase. The aim of this work is to introduce a general framework to (simultaneously) assess and evaluate the objectively rational utility and the subjectively perceived attractiveness. We illustrate the approach by means of an application to retirement savings products. Such a combined approach can help to identify or design retirement savings products that create a high (albeit not the maximum possible) objective utility while at the same time being subjectively of high (albeit not maximum possible) attractiveness. We argue that a focus on such products might lead to improved consumer decisions compared to observed decisions that are often driven by subjective attractiveness (resulting in rather low objective utility).

show abstract

One size fits all? Drawdown structures in Australia and The Netherlands

Abstract: Take-down policy If you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim.

Cited by 3 publications

References 51 publications

The retirement puzzle

The retirement puzzle

Using a stochastic economic scenario generator to analyse uncertain superannuation and retirement outcomes

What to offer if consumers do not want what they need? A simultaneous evaluation approach with an application to retirement savings products

Contact Info

Product

Resources

About