Means-Tested Public Pensions, Portfolio Choice and Decumulation in Retirement

Hulley, H; McKibbin, R; Pedersen, A; Thorp, S

Means-Tested Public Pensions, Portfolio Choice and Decumulation in Retirement

Hulley, H

McKibbin, R Pedersen, A Thorp, S

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Publication Type:: Journal Article
Citation:: Economic Record, 2013, 88 (284), pp. 31 - 51
Issue Date:: 2013-01-01

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Field	Value	Language
dc.contributor.author	Hulley, H https://orcid.org/0000-0002-6684-8309	en_US
dc.contributor.author	McKibbin, R	en_US
dc.contributor.author	Pedersen, A	en_US
dc.contributor.author	Thorp, S https://orcid.org/0000-0003-3462-0876	en_US
dc.date.issued	2013-01-01	en_US
dc.identifier.citation	Economic Record, 2013, 88 (284), pp. 31 - 51	en_US
dc.identifier.issn	0013-0249	en_US
dc.identifier.uri	http://hdl.handle.net/10453/23443
dc.description.abstract	Age Pension means-testing buffers retired households against shocks to wealth and may influence decumulation patterns and portfolio allocations. Simulations from a simple model of optimal consumption and allocation strategies for a means-tested retired household indicate that, relative to benchmark, eligible and near-eligible households should optimally decumulate faster, and choose more risky portfolios, especially early in retirement. Empirical modelling of a Household, Income and Labour Dynamics in Australia panel of pensioner households confirms a riskier portfolio allocation by wealthier retired households. Poorer pensioner households decumulate at around 5 per cent p.a. on average; however, better-off households continue to add around 3 per cent p.a. to wealth, even when facing a steeper implicit tax rate on wealth. © 2013 The Economic Society of Australia.	en_US
dc.relation.ispartof	Economic Record	en_US
dc.relation.isbasedon	10.1111/ecor.12002	en_US
dc.subject.classification	Economics	en_US
dc.title	Means-Tested Public Pensions, Portfolio Choice and Decumulation in Retirement	en_US
dc.type	Journal Article
utslib.citation.volume	284	en_US
utslib.citation.volume	88	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
utslib.for	1402 Applied Economics	en_US
utslib.for	14 Economics	en_US
utslib.for	15 Commerce, Management, Tourism and Services	en_US
dc.location.activity	Pisa, Italy
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Finance Discipline
pubs.organisational-group	/University of Technology Sydney/Strength - CENSOC - Study of Choice
pubs.organisational-group	/University of Technology Sydney/Strength - QFRC - Quantitative Finance Research Centre
utslib.copyright.status	closed_access
pubs.issue	284	en_US
pubs.publication-status	Published	en_US
pubs.volume	88	en_US

Abstract:

Age Pension means-testing buffers retired households against shocks to wealth and may influence decumulation patterns and portfolio allocations. Simulations from a simple model of optimal consumption and allocation strategies for a means-tested retired household indicate that, relative to benchmark, eligible and near-eligible households should optimally decumulate faster, and choose more risky portfolios, especially early in retirement. Empirical modelling of a Household, Income and Labour Dynamics in Australia panel of pensioner households confirms a riskier portfolio allocation by wealthier retired households. Poorer pensioner households decumulate at around 5 per cent p.a. on average; however, better-off households continue to add around 3 per cent p.a. to wealth, even when facing a steeper implicit tax rate on wealth. © 2013 The Economic Society of Australia.

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http://hdl.handle.net/10453/23443