The Impact of Tax on the Prospects of Achieving Target Retirement Wealth in Australian Default Superannuation Plans

摘要

Prior empirical studies on superannuation in Australia have investigated the adequacy of superannuation to fund retirement on a pre‑tax basis. Also, government policy in this area is often predicated on simplistic assumptions and methodologies, with little or no empirical evidence of the impacts of superannuation taxation arrangements on retirement wealth and the adequacy of default superannuation plans. This “baseline” study fills this gap in the literature by providing evidence about the prospect of a representative member of a complying superannuation fund in Australia, on retirement, having sufficient accumulated superannuation to adequately fund their retirement under current taxation arrangements. We assume the fund utilises a typical default asset allocation, and we use a bootstrap simulation approach to generate relevant asset returns. We compare a representative retiree’s terminal wealth at vesting age with a nominal retirement wealth target. Our results suggest that a representative member under current superannuation taxation arrangements has a roughly 50% chance of not accumulating sufficient superannuation to meet a reasonable retirement wealth target by retirement age.