Choices and Constraints over Retirement Income Streams: Comparing Rules and Regulations*

The new Simplified Superannuation regulations for Australian superannuation provide tax concessions to retirement income streams which comply with legislated minimum drawdown rules. We evaluate these new drawdown rules against four alternatives, including three formula‐based ‘rules of thumb’ used by financial planners. We find that the new regulations are a substantial improvement on the previous rules for allocated pensions and, when compared with the formula‐based rules, are a good compromise in terms of simplicity, adequacy and risk. We also find that welfare is lower for most individuals who follow the Simplified Superannuation rules compared with welfare under an optimal path or a simple fixed percentage drawdown rule, but that outcomes could be improved through a further simplification of the new rules.     

Capital deepening and the rise of the factory: the American experience during the nineteenth century1

Between 1850 and 1880, capital per worker in United States manufacturing increased on average by at least 75 per cent, even after taking account of declining capital goods prices. During this same period, production shifted from small, labour‐intensive artisan shops to large capital‐intensive factories. Similar changes have occurred in many other countries at the same stage of industrialization. Establishment‐level data from the federal censuses of manufacturing, however, reveal that the shift in production in the United States accounts for a modest amount of the increased capital per worker. There, at least, capital deepening seems to have occurred in almost all firms everywhere.     

Taxes,Retirement Transfers,and Annuities*

In most countries, retirement benefits from pension saving must be taken as an annuity. By contrast, Australia allows benefits to be taken as a lump sum, and instead has recently introduced various tax incentives to encourage annuity purchase. This paper investigates the effectiveness of these tax concessions, and concludes that they do little to achieve this objective This is because they are nullified by the provisions of the broader tax and social security framework within which Australian private pension policy is set     

The Role of Microfinance in Contemporary Rural Development Finance Policy and Practice: Imposing Neoliberalism as ‘Best Practice’

Microcredit emerged in the 1970s as a mechanism whereby virtually all poor individuals could supposedly escape their poverty through self‐help and individual entrepreneurship. Crucially, neoliberal policy‐makers found the microcredit concept ideologically compelling, and the international development community soon began to provide massive support to establish and expand the microfinance movement. Today, however, even long‐standing microfinance advocates now reluctantly accept that microcredit has actually had no positive impact upon poverty or ‘bottom‐up’ rural development. In fact, those rural communities most exposed to microcredit have been severely damaged in a number of ways, especially through sub‐prime‐style ‘boom‐to‐bust’ episodes. Largely because of its supreme ideological usefulness, the microfinance movement nonetheless still retains some support in the major neoliberal‐oriented international development institutions, pro‐globalization think‐tanks, and in a number of Western governments.     

The evolution of markets in early modern Europe, 1350–1800: a study of wheat prices1

Using a compilation of monthly and annual wheat price data, this article examines the trend of market development in Europe from the late medieval period to the industrial revolution. In contrast to much of the earlier scholarship, which suggests that markets improved, the findings propose that markets were on average as well integrated in Europe in the early sixteenth century as in the late eighteenth century. In the intervening period, markets are found to have suffered a severe contraction. These findings enable us to build a more complete picture of markets in history, and to carry out a better examination of the relationship between markets and economic growth.     

Recent Superannuation Reforms: Choice and Flexibility in Retirement

This introduction to AAR's Forum on superannuation surveys the increased choice and flexibility available to retirement savers, with particular emphasis on the proposals announced in the May 2006 commonwealth budget. In an environment of greater reliance on defined-contribution superannuation arrangements, increased member choice means an increased responsibility on individual fund members to make active and appropriate decisions. As indicated in the analysis of papers in the Forum, some guidance may be required to ensure an adequate standard of living in retirement for all.     

Investment Decisions for Retirement Savings

We conducted a choice experiment to investigate whether retirement savers follow simple portfolio theory when choosing investments. We modeled experimental survey data on 693 participants using a scale-adjusted version of the latent class choice model. Results show that underlying variability in response was explained by age and “risk profile” score and that preferences varied with income and age. Younger individuals were conventionally risk averse, but older, higher-income individuals may react positively to both higher returns and increasing risk, when risk is presented as widening ranges of possible outcomes. Respondents tended to choose among a few similar investment options.