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Superannuation and Retirement Planning Modelling

Project Member(s): Novikov, A.

Funding or Partner Organisation: Commonwealth Scientific and Industrial Research Organisation (Commonwealth Scientific & Industrial Research Organisation)

Start year: 2014

Summary: The Australian superannuation industry has produced the fourth largest pool of funds under management in the world. With such a large pool of funds, the allocation of superannuation assets has the potential to drive economic development and reshape the Australian economy through contributing to the development of a corporate bond market, supporting innovation, and create economic growth and employment opportunities by investing in Australian business. Moreover, the world¿s population is getting older leading to higher absolute numbers of elderly people, a larger share of elderly, longer healthy life expectancies, and relatively fewer numbers of working-age people. These trends have become increasingly uncertain to predict and the burden of ageing more difficult to budget. Life cycle utility simulation model to model retiree¿s preferences of bequest, housing, consumption, health and age pension for different groups of people. This can be used to forecast the age pension requirements for Australia which is critical for the government budget and will allow to assess the impact of changes to the existing policies (e.g. impact of change in compulsory superannuation contributions). At the same time, the model can be used for retirement planning and management. Models for the behaviour of people towards retirement and products for retirees such as annuity style products. Dynamic stochastic general equilibrium model at the national level to study the interaction between superannuation industry and economy, the effect of government policies, business-cycle fluctuations, economic growth and other related macroeconomic issues. Such models are critical for the superannuation industry, retirement planning and management. Research outcomes will include publications and practical implementations.

Publications:

Andréasson, JG, Shevchenko, PV & Novikov, A 2017, 'Optimal consumption, investment and housing with means-tested public pension in retirement', Insurance: Mathematics and Economics, vol. 75, pp. 32-47.
View/Download from: Publisher's site

Keywords: superannuation, economic development, bond market, simulation model, retirement planning, management.

FOR Codes: Superannuation and Insurance Services, Financial Mathematics