Retirement Income Policy in Australia: Life-Cycle Analyses

Retirement Income Policy in Australia: Life-Cycle Analyses

Retirement income policy in Australia has undergone significant changes over the last two decades, including the introduction of the Superannuation Guarantee [SG] with mandatory contributions in 1992 and the 2007 superannuation changes with the benefit tax abolition. Numerical implications of adopted pension reforms and reform proposals such as further increases in the SG contribution rate, changes to superannuation taxation and to means-testing of the age pension have been examined mainly by micro- simulation models. These models, often criticized for their lack of theoretical content, provide an incomplete picture of pension policy effects because of no or limited behavioural responses to the underlying policy change. In this book, models based on the life-cycle theory of saving pioneered by Modigliani and Brumberg (1954) are applied to numerically evaluate intergenerational, welfare and macroeconomic implications of proposed changes to Australia?s retirement income policy.