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The impact of tax on the prospects of achieving target retirement wealth in Australian default superannuation plans
Published on 01 Apr 17 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE
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.
Author profiles
Lisa Samarkovski CTA
Lisa is a sessional staff member in tax, Griffith Business School, Griffith University.
- Current at
01 April 2006
Richard Copp
Richard is a Senior Lecturer, Department of Accounting, Finance, and Economics, Griffith Business School,Griffith University, Brisbane, Australia.Current at 1 April 2017
Osei K Wiafe
Osei is a Research Fellow, Griffith Centre for Personal Finance and Superannuation, Department of Accounting, Finance, and Economics, Griffith Business School, Griffith University, Brisbane, Australia.Current at 1 April 2017
Dr Brett Freudenberg CTA
Brett is a Professor – Taxation at Griffith University. Brett is known for his research expertise in the tax law and policy issues facing private enterprises, as evidenced by his Fulbright Scholarship (2006) and over 80 refereed publications in leading Australian and international journals. In 2020, he was awarded the national ATTA-Hill medal in recognition of outstanding contribution to Australasian tax policy and tax teaching. Brett is passionate about education being a transformative process, and his effectiveness as a teacher has been recognised through five national awards (including the award of two Australian Learning and Teaching Council citations: 2008 & 2011). In 2019 Brett was successful in securing funding from the Federal Government to establish the Griffith Tax Clinic, which sees students under supervision providing free tax assistance to those in need in the community. Prior to commencing with Griffith University, Brett was a senior taxation consultant with KPMG and a solicitor with Corrs Chambers. - Current at 06 July 2022
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