Civil Services and Military Retirement Income Provision in Australia
University of New South Wales (UNSW) - School of Actuarial Studies, Centre for Pensions and Superannuation; Centre for International Finance and Regulation (CIFR)
University of New South Wales (UNSW) - Australian School of Business, School of Economics
July 24, 2011
UNSW Australian School of Business Research Paper No. 2011 AIPAR 02
This paper documents developments in public sector pensions in Australia, and reports estimated unfunded liabilities associated with benefits promised to public sector employees. Australia’s experience with public sector pensions is unusual – currently, the defense forces and the judiciary apart, all new entrants to public sector schemes confront defined contribution (DC) plans. The transition from defined benefit (DB) to DC has taken place over the last 20 years. We argue that an important driver for this relatively rapid transition of public sector pensions is the broader retirement policy framework in Australia, in which the only nationally mandated earnings related retirement financing is based upon a compulsory DC contributory plan. While legacy costs from the now-closed public sector plans are significant at 15% of GDP, it is projected that this will fall to zero over the next 30 years, both through natural attrition and a series of initiatives designed to pay off the pension debt.
Number of Pages in PDF File: 33
Keywords: civil service pension, legacy cost, superannuation
JEL Classification: D91,G23, H55, H72working papers series
Date posted: August 1, 2011
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