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The Australian Retirement Lottery: A System Failure, Amandha Ganegoda, John Evans

Sydney Business School - Papers

The purpose of this paper is to assess the adequacy of the Australian retirement system to fund the needs of retirees by taking into account both the Knightian risk arising from market volatility under normal market conditions as well as the Knightian uncertainty arising from rare but severe market shocks. We have also taken into account changes in employment during the pre-retirement phase. Given the low frequency, high impact of market shocks, the result is that cohorts of Australian retirees will enjoy very different levels of retirement income and there will be consequent shocks to the demand for the Age …