1. Why do we need ret income policies?

A) Market failure due to Distortions from other public policies Double taxation of saving Concessional tax treatment of owner-occupier housing Provision of public age pension (27.7% AWE) Lack of appropriate products at reasonable prices Adverse selection in annuities market -> info assymetries increase price of annuities Supply side deficiency -> lack of products to hedge supplier risks B) Failure in planning & execution of life cycle saving due to Short-sightedness Complexity Procrastination C) Poverty relief & redistribution Current income (if any) 2 low to save for retirement Policy support forms part of wider redistributive goals D) Achieve other goals: econ efficiency, output growth 2. How can 1 evaluate whether the retirement policy is effective or not? Individual criteria - econ & fin'l risks faced by 1 in retirement Replacement risk Investment risk Longevity risk Default risk Coverage risk Political risk Contingency risk Inflation risk Economic-wide criteria Poverty relief & redistribution - does the system cover those who can't save for themselves? Enhance econ efficiency - does the system encourage labour force participation & national saving (public & private)? Encourage LT EG? 3. What r Aus features of super? 1. [safety net] Public age pension - means tested 2. [consumption smoothing] Mandatory superannuation contributions 3. [voluntary retirement savings] Incentives to make addit contributions eg tax concessions Opinion - Retirement funds have to come from somewhere, whether it is from the private or public purse. But in the end each of us collectively have to pay for it. What matters most IMHO is that the funds are put aside ahead of time instead of leaving unfunded pension liabilities and that individuals get some control over how they think it should be best invested. Our current super system does

both. The only real question is about how much needs to be set aside for an adequate retirement. Exactly, a lot of european countries have created enormous budgetary burdens through unfunded retirement schemes. What are provident funds? What is Pay-as-you-go (PAYG) Pension? many national pensions are PAYG, where the outgoings to today's pensioners are paid for by the contributions of today's workers and employers. PAYG pensions are essentially unfunded pension plan, meaning that the plan accepts the responsibility to provide retirement benefits to participants, but does not set aside adequate moneys today to meet future obligations. Most public sector pensions have been unfunded, PAYG, plans. The PAYG system is based on a philosophy of "intergenerational solidarity" where today's workers support older workers (see System Dependency Ratio). With pensioners living longer, current contribution rates are too low in many pensions, and the danger is that these pensions are already, or will become, financially unsustainable and collapse. The opposite of the PAYG approach is the funded pension. Funded Pensions - an asset is allocated 2day against every future obligation. These pension plans do not thus rely on intergen transfers like the pay-as-you-go pensions, & should be financially sustainable. A fully-funded plan would mean that there are enough assets to meet all obligations. (By definition, defined contribution pensions are fully funded; defined benefit pensions, however, may be less than fully funded as they are never likely to have to meet their obligations on any given day). Who is aus's financial services & superann minister? Bill shorten When was super made compulsory & by whom? 1992, Paul keating's labour govt What is the current rate of compulsory super? 9-12% lobbied by bill shorten In summary, superannuation is A useful saving scheme, for ex, effective for tax purposes, can take out tax free after preservation age is reached. Dif across dif countries - In NZ, super is not compulsory & ppl have their money in investment property instead. a work in progress