Choices and Constraints Over Retirement Income Streams: Comparing Rules and Regulations

Quantitative Finance Research Centre, University of Technology, Sydney Research Paper No. 200

39 Pages Posted: 18 Mar 2008

See all articles by Hazel Bateman

Hazel Bateman

UNSW Sydney, CEPAR

Susan Thorp

The University of Sydney Business School

Multiple version iconThere are 2 versions of this paper

Date Written: August 2007

Abstract

The new Simplified Superannuation regulations for Australian superannuation provide tax concessions to retirement income streams which comply with legislated minimum drawdown rules. We evaluate these new drawdown rules against four alternatives, including three formula-based 'rules of thumb' and the previous legislated minimum drawdown limits for allocated pensions. We find that the new regulations are a substantial improvement on the previous rules for allocated pensions and, when compared with the four formula-based rules, are a good compromise in terms of simplicity, adequacy and risk. We also find that welfare is lower for most individuals who follow the Simplified Superannuation compared with welfare under an optimal path or a simple fixed percentage drawdown rule, but that outcomes could be improved through a further simplification of the rules.

Suggested Citation

Bateman, Hazel and Thorp, Susan, Choices and Constraints Over Retirement Income Streams: Comparing Rules and Regulations (August 2007). Quantitative Finance Research Centre, University of Technology, Sydney Research Paper No. 200 . Available at SSRN: https://ssrn.com/abstract=1106053 or http://dx.doi.org/10.2139/ssrn.1106053

Hazel Bateman

UNSW Sydney, CEPAR ( email )

High Street
Sydney, NSW 2052
Australia

Susan Thorp (Contact Author)

The University of Sydney Business School ( email )

Abercrombie Building
H70
The University Of Sydney, NSW 2006
Australia
0290366354 (Phone)

Register to save articles to
your library

Register

Paper statistics

Downloads
50
Abstract Views
594
PlumX Metrics