The Case for Gender-Sensitive Superannuation Plan Design

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Basu, Anup K
Drew, Michael E
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Ross Williams

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2009
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Abstract

A key feature of superannuation plan design is the assumption that members have long and continuous periods of employment over which contributions are made. This heroic design feature has led to debate on the adequacy of superannuation plans for those with interrupted employment, particularly the adverse impacts this has on the retirement income prospects of women. This paper employs non-parametric stochastic simulation to investigate two possible solutions to gender inequality in superannuation, higher contribution rates and more aggressive asset allocation. Our results suggest that while both these strategies in isolation are effective in reducing the current gender disparity in superannuation outcomes, they demand significant changes to current arrangements when employed individually to address the problem. A combined approach is found to be more powerful in ensuring a more equitable superannuation outcome for women, as it nullifies the relative disadvantage of interrupted employment with only modest changes to contribution rates and asset allocation.

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The Australian Economic Review

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42

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2

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Author Posting. Copyright Griffith University, 2009. This is the author's version of the work. It is posted here by permission of Griffith University for personal use, not for redistribution. The definitive version was published in Australian Economic Review, 42, 2, 177-189. http://dx.doi.org/10.1111/j.1467-8462.2009.00534.x

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Economics

Finance

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