Choices and constraints over retirement income streams : comparing rules and regulations
Date
2008
Authors
Bateman, H.
Thorp, S.
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Journal article
Citation
Economic Record, 2008; 84(special issue):S17-S31
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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' used by financial planners. We find that the new regulations are a substantial improvement on the previous rules for allocated pensions and, when compared with the 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 rules compared with welfare under an optimal path or a simple fixed percentage drawdown rule, but thar outcomes could be improved through a further simplification of the new rules.
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Link to a related website: http://wwwdocs.fce.unsw.edu.au/economics/Research/WorkingPapers/2007_29.pdf, Open Access via Unpaywall
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Copyright 2008 The Economic Society of Australia