What Dividend Imputation Means for Retirement Savers

19 Pages Posted: 17 May 2020

See all articles by Adam Butt

Adam Butt

Australian National University - Research School of Finance, Actuarial Studies & Statistics

Gaurav Khemka

Australian National University (ANU)

Geoffrey J. Warren

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: June 2019

Abstract

We examine the implications for Australian retirees of full access to dividend imputation credits using a stochastic life‐cycle model. We find that the availability of imputation credits can justify a significant bias towards Australian equities in retirement portfolios, largely at the expense of world equities. We also generate estimates of the value of imputation credits to retirees, finding it could potentially support increased consumption during retirement of 5–6 per cent, or equivalent value to a 8–9 per cent higher balance at retirement. Our study enhances the understanding of equity home bias, and provides insights relevant for public policy.

Suggested Citation

Butt, Adam and Khemka, Gaurav and Warren, Geoffrey J., What Dividend Imputation Means for Retirement Savers (June 2019). Economic Record, Vol. 95, Issue 309, pp. 181-199, 2019, Available at SSRN: https://ssrn.com/abstract=3597572 or http://dx.doi.org/10.1111/1475-4932.12468

Adam Butt (Contact Author)

Australian National University - Research School of Finance, Actuarial Studies & Statistics ( email )

Canberra, Australian Capital Territory 2601
Australia

Gaurav Khemka

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

Geoffrey J. Warren

affiliation not provided to SSRN

No Address Available

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