CLUSTER PROJECT 8: SUPERANNUATION: EUROPEAN COMPARATIVE PERSPECTIVES

Project Overview:

Research under this cluster project addresses what can be learned from European experience. Where are the success stories to be found – and what factors contributed to positive outcomes? Topics included are gender gap in retirement outcomes, and governance of funds.

Principal Researcher: Professor Noel Whiteside (University of Warwick)

Outcomes:

Drawing on European research and policy experience, this paper explores the implications for women of recent shifts from PAYG state pensions to individualised, privately funded savings systems such as the Australian superannuation scheme. It argues that funded schemes are unable to address inequalities in old age incomes generated by personal savings, particularly in Europe, where there are financial and labour market instabilities, public expenditure constraints and rising costs due to demographic ageing. Further, the paper marginally favours pension splitting and tax-based solutions, while stressing that preventative action should be taken now, as the full effects of reforms in Europe and Australia will not be felt for some years.

Summary | Working Paper

While there are many differences between the Australian and UK super (pension) arrangements, following the introduction of auto-enrolment in the UK in 2012 they are increasingly similar market-based systems. Less stable returns for superannuation (pension) funds in recent years have prompted governance reforms, both in Australia and the UK, designed to improve performance and reduce costs. This paper reviews governance issues within personal funded pensions in both countries, focusing specifically on costs incurred. Although reforms are still underway, the paper concludes that due to regulatory changes compliance costs have tended to increase over time, and thus are likely to raise overall management expenses, thereby exacerbating the very problems these policies seek to address.

Summary | Working Paper