RDP 2007-08: The Effect of the Australian Superannuation Guarantee on Household Saving Behaviour 5. Conclusions

Australia's experience with compulsory pension accounts is a useful case study since the reforms have been operating for over 15 years. This paper finds that Australia's pension accounts increased household wealth, with an extra dollar in their compulsory pension accounts adding between 70 and 90 cents to household wealth. This result is consistent with some households facing financial constraints that prevent them from fully offsetting the compulsory contributions employers make on their behalf by reducing other assets or borrowing. Voluntary saving for retirement also appeared to increase slightly. This result may be due to the Superannuation Guarantee making households more aware of the need to save for retirement, or the added convenience of being able to make contributions directly into pension accounts set up by their employer. Finally, empirical estimates suggest that there is no significant effect on intentions regarding the timing of retirement. These results suggest that compulsory pension accounts can increase household saving and expected retirement incomes.