Household savings and the superannuation guarantee

Key researchers

Project background and aims

The purpose of this study is to examine how the compulsory employer superannuation system interacts with voluntary savings. It focuses in particular on the extent to which the existence of compulsory superannuation – and increases in the compulsory superannuation rate – might affect voluntary savings.

Our study, like others before it, finds that increases in compulsory saving are associated with decreases in private household saving. However, the substitution effect is significantly less than one. This suggests that the compulsory superannuation system in Australia generates a net overall savings increase. We also find that compulsory superannuation encourages and leads to the reallocation of household wealth into property from other forms of investment. This study was part of the work commissioned for the Retirement Income Review by The Treasury.