Adequacy of the Australian Superannuation Guarantee Levy: A Post Retirement Analysis

Posted: 12 Jun 2018

See all articles by John R. Evans

John R. Evans

Centre for Analysis of Complex Financial Systems

Date Written: September 1, 2017

Abstract

Most of the analysis of the adequacy of the Superannuation Guarantee Levy (SGL) system has concentrated on the pre-retirement phase and has used analysis that ignored the volatility of the variables that affect the SGL accumulations, and hence the adequacy of the system. Ganegoda et al (2017) introduced volatility to the analysis and concluded the SGL system was going to provide highly variable retirement benefits. In this paper, we have extended the analysis by considering the combined effect of both longevity and the volatility of the equity capital market during the retirement phase. We have concluded that the SGL system will deliver highly variable standards of living in retirement across cohorts of retirees, but will in most situations support the ASFA (2016) modest standard of living in retirement. The continuation of the Age Pension will provide an option for retirees from the SGL system to make withdrawals at the ASFA (2016) comfortable standard of living, knowing that if they run out of assets, they will receive the Age Pension which isn’t much lower than the ASFA (2016) modest standard of living.

Keywords: Superannuation Guarantee Levy, Australian Age Pension, Retirement Funding, Capital Market Volatility, Longevity

JEL Classification: C5, I31, G17, G18

Suggested Citation

Evans, John R., Adequacy of the Australian Superannuation Guarantee Levy: A Post Retirement Analysis (September 1, 2017). Available at SSRN: https://ssrn.com/abstract=3184679

John R. Evans (Contact Author)

Centre for Analysis of Complex Financial Systems ( email )

PO Box 363
Summer Hill, 2130
Australia

Register to save articles to
your library

Register

Paper statistics

Abstract Views
96
PlumX Metrics