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Assessing the national saving effects of the Government's superannuation policies: Some examples of the new RIMGROUP National Saving Methodology

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Phil Gallagher
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Conference Paper 97/3

Paper presented at the Fifth Colloquium of Superannuation Researchers, University of Melbourne, 11/12 July 1997.

This paper discusses the RIM national saving methodology used for the aggregate analysis of superannuation and retirement income policies. A new feature of this methodology includes a fiscal account which accrues changes in public debt yielding changes in public debt interest. The methodology can also include a marginal private saving rate for the private offset account which varies by decile of income. Other strengths and limitations of the methodology are discussed.

Three examples of the use of the methodology are presented:

  1. The Government’s total superannuation policy as announced in the 1996-97 and 1997-98 Budgets is compared to a base without the Superannuation Guarantee;
  2. A Government policy scenario in which the new saving rebate encourages behaviour change adding 12% to member contributions over 5 years; and,
  3. A Government policy scenario in which the new saving rebate encourages behaviour change adding 24% to member contributions over 5 years.

The total effect of these measures on national financial saving compared to a base without the employer superannuation guarantee or other Government policies is projected to be:

Financial Year Example 1
No increase in member conts
Example 2
12% increase in member conts
Example 3
24% increase in member conts
2000-01 1.5% 1.6% 1.6%
2004-05 2.3% 2.4% 2.5%
2009-10 2.9% 3.0% 3.2%
2014-15 3.2% 3.3% 3.5%
2019-20 3.6% 3.8% 4.0%

The RIM Task Force is jointly sponsored by the Commonwealth Deprtments of the Treasury, Social Security and Finance. I would like to thank my colleagues, particularly Dr George Rothman, for their advice and assistance. The views expressed in this paper are those of the author and do not necessarily reflect those of the Government or any sponsoring Departments of the RIM Task Force.