Superannuation, Population Ageing and Living Standards in Australia

Abstract

In this paper we simulate the effect of an increase in the Superannuation Guarantee Levy (SGL) by 3 per cent and 6 per cent, respectively, on average living standards. We apply the Guest-McDonald model of optimal national saving for a small open economy. The simulations account for the projected age structure of the population, the differences in productivity of workers of different ages and the differences in consumption demands of young and older consumers. In this way we account for the impact of population ageing on living standards. To the extent that an increase in the SGL increases national saving beyond what it would otherwise have been, there are two effects on living standards. One..