File(s) under permanent embargo

Encouraging superannuation income streams with tax-free earnings to be taken in a form that provides longevity insurance

journal contribution
posted on 2017-12-01, 00:00 authored by Rami HanegbiRami Hanegbi
Australia’s superannuation system allows those entering retirement to take their benefits in the form of an income stream which benefits from tax-free earnings. Currently, very few income stream benefits are taken in the form of a lifetime annuity even though such an instrument provides an excellent form of longevity insurance. The Australian Government is currently implementing changes that expand the tax-free earnings net to include Deferred Life Annuities and Group Self-Annuitisation Schemes. This paper finds that this is a positive move that will potentially benefit many retirees. The government is also considering implementing some behavioural tools which include a regime under which superannuation trustees choose a pre- packaged bundle of income stream products that include annuities. Members entering retirement would actively choose to adopt these products. It is argued that such a regime would be a negative policy development that would result in many retirees annuitising to a non-optimal extent.

History

Journal

eJournal of tax research

Volume

15

Issue

3

Pagination

402 - 423

Publisher

Australian School of Business, University of New South Wales

Location

Sydney, N.S.W.

ISSN

1448-2398

Language

eng

Publication classification

C Journal article; C1 Refereed article in a scholarly journal

Copyright notice

2017, School of Taxation and Business Law (Atax), UNSW Business School UNSW Sydney