An Analysis of the Variability of Outcomes for the Mandatory Components of the Australian Retirement System

Abstract

The outcome of the mandatory components of the Australian retirement system for both retirees and the Australian Government will vary over time based on a complex interrelationship of wage growth, investment returns, (un)employment, and longevity of retirees. This paper considers the impact of variations in these factors and concludes that for the mean income household, real investment returns are the critical determinant of retiree outcomes, whilst for the Australian Government, longevity of retirees is the critical factor.

Keywords: Retirement Adequacy, Superannuation Guarantee Levy, Wage Growth, Investment Returns, Longevity

JEL Classification: D14, E6, G5, I3