The Market for Retirement Products in Australia

Australia introduced a mandatory retirement savings scheme in 1992. This built on pre-existing voluntary occupational plans. The new scheme has been very successful in expanding coverage and mobilizing large financial savings that are equal to clos...

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Bibliographic Details
Main Authors:	Brunner, Gregory Gordon, Thorburn, Craig
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCESS TO CAPITAL ACCOUNT HOLDER ACCOUNTING ADDITIONAL CONTRIBUTIONS ADMINISTRATIVE COST AFFORDABLE HOUSING ANNUAL CONTRIBUTIONS ANNUAL EARNINGS ANNUAL INCOME ANNUAL WAGE ASSET HOLDINGS AVERAGE EARNINGS AVERAGE WAGE BALANCE SHEET BANK DEPOSIT BANKS BENEFICIARIES BENEFICIARY BENEFIT ENTITLEMENTS BUDGET STATEMENTS BUSINESS OPERATIONS BUSINESS PLAN CALCULATION CAPITAL ADEQUACY CAPITAL INVESTMENT CAPITAL REQUIREMENTS CASH FLOW COMMUNITY SERVICES COMPETITIVE FINANCIAL SYSTEM COMPULSORY CONTRIBUTIONS CONSUMER CONSUMER PROTECTION CONSUMERS CONTRIBUTION CONTRIBUTION RATE CONTRIBUTION RATES CONTRIBUTION SCHEMES CREDIT RISK CREDIT UNIONS CURRENT EXPENDITURES CURRENT PENSIONERS DEBT DEFINED BENEFIT PENSIONS DEFINED CONTRIBUTION PENSION DEPOSIT DEPOSIT ACCOUNTS DEPOSITORS DISABILITY DISCLOSURE OF INFORMATION DISCOUNT RATE EARLY RETIREMENT EARNINGS ECONOMIC SHOCKS EMPLOYER CONTRIBUTION EMPLOYER CONTRIBUTIONS EQUITY MARKETS EXEMPT INVESTMENT EXPENDITURE FINANCIAL AFFAIRS FINANCIAL ASSETS FINANCIAL BEHAVIOR FINANCIAL CIRCUMSTANCES FINANCIAL GROUP FINANCIAL HARDSHIP FINANCIAL INDEPENDENCE FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL POSITION FINANCIAL SAVINGS FINANCIAL SECTOR FINANCIAL SECURITY FINANCIAL SYSTEM FINANCIAL SYSTEMS FISCAL POSITION FUND ASSETS GENERAL PUBLIC GOVERNMENT BUDGET GOVERNMENT LEGISLATION GOVERNMENT PENSION GOVERNMENT POLICIES GROSS INCOME HOME LOANS HOME OWNERSHIP HOMEOWNERS HOUSEHOLD WEALTH INCOME GROUPS INCOME INCREASES INCOME LEVEL INCOME STREAM INCOME STREAMS INCOME TAX INDEBTEDNESS INFLATION INSURANCE POLICY INTEREST RATES INTERNATIONAL BANK INVESTING INVESTMENT ACCOUNT INVESTMENT CHOICE INVESTMENT CHOICES INVESTMENT EARNINGS INVESTMENT INCOME INVESTMENT POLICY INVESTMENT RETURN INVESTMENT RETURNS INVESTMENT RISK INVESTMENT STRATEGY LEVEL OF CONTRIBUTION LEVEL OF RISK LEVELS OF RISK LIABILITY LIFE EXPECTANCY LIFE INSURANCE LIFE INSURANCE COMPANIES LIFE INSURANCE COMPANY LIFE INSURANCE POLICIES LIFE INSURANCE PREMIUMS LIFE INSURER LIFE INSURERS LIFETIME LIMITED INCOME LOAN LUMP SUM LUMP SUMS MARKET PARTICIPANT MARKET VALUE MARKETING MINIMUM BENEFIT MINIMUM BENEFITS MINIMUM CONTRIBUTION MINIMUM PENSION NATIONAL SAVING NET WORTH OCCUPATIONAL PLANS OCCUPATIONAL SCHEME OCCUPATIONAL SCHEMES OTHER ASSETS PAYMENT AMOUNTS PENSION PENSION AGE PENSION ASSET PENSION ASSETS PENSION BENEFIT PENSION BENEFITS PENSION COVERAGE PENSION ENTITLEMENT PENSION ENTITLEMENTS PENSION FRAMEWORK PENSION FUND PENSION FUNDS PENSION INCOME PENSION LITERATURE PENSION POWERS PENSION PROVIDERS PENSION REFORMS PENSION SYSTEM PENSION SYSTEMS PENSIONABLE AGE PENSIONER PENSIONERS PERSONAL INCOME POPULATION AGEING POVERTY ALLEVIATION PRESENT VALUE PRIVATE PENSION PRIVATE SAVINGS PROBABILITY PRODUCTIVITY PRUDENT RISK MANAGEMENT PRUDENTIAL REGULATION PRUDENTIAL STANDARDS PUBLIC PENSIONS RATE OF GROWTH RATES OF INTEREST REAL ESTATE REGULAR INCOME REGULAR PAYMENTS REGULATORY FRAMEWORK REPAYMENTS REPLACEMENT RATE REPLACEMENT RATES RESERVES RETIREMENT RETIREMENT AGE RETIREMENT BENEFIT RETIREMENT INCOME RETIREMENT INCOMES RETIREMENT PLANS RETIREMENT PRODUCTS RETIREMENT SAVINGS RETIREMENT SAVINGS ACCOUNT RISK TOLERANCE RISK TOLERANCE LEVELS SAFETY NET SALE SALES SECURITIES SOCIAL SECURITY SOLVENCY SOURCE OF RETIREMENT INCOME SOURCES OF INCOME STATUTORY FUND STATUTORY FUNDS STOCK MARKET SUPERANNUATION SYSTEM SUPERVISORY AUTHORITY TAX RATE TAX TREATMENT TAXABLE INCOME TERMINATION TREASURY TRUST DEED TRUSTEE TRUSTEES TYPES OF PENSIONS UNDERLYING ASSETS VALUATION VALUATIONS VALUE OF ASSETS VOLUNTARY SAVINGS WAGE GROWTH WAGES WITHDRAWAL
Online Access:	http://documents.worldbank.org/curated/en/2008/10/9918348/market-retirement-products-australia http://hdl.handle.net/10986/6934

Description
Summary:	Australia introduced a mandatory retirement savings scheme in 1992. This built on pre-existing voluntary occupational plans. The new scheme has been very successful in expanding coverage and mobilizing large financial savings that are equal to close to 100 percent of GDP. However, Australia does not impose restrictions on payout options. The payout phase used to be dominated by lump sum withdrawals, which accounted for 80 percent of benefit payments as recently as 2002. But pension payments increased in recent years and now represent 45 percent of total payments. The vast majority of these pension payments take the form of term annuities and allocated annuities. The latter are similar to phased withdrawals in Chile but run for fixed terms of up to 25 years rather than for lifetime terms. The demand for life annuities and lifetime phased withdrawals is very limited. The paper discusses the factors that have shaped the pattern of demand for retirement products, including the availability of the universal age pension and the effect of clawback provisions, the impact of the high level of home ownership, and the widespread preference of retiring workers for reliance on self-annuitization. The paper also reviews the prudential regulation of superannuation funds and life insurance companies.

The Market for Retirement Products in Australia

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