Unexpected Outcomes of the Financial Institutions Act

The Financial Institutions Act of 1992 provided a new legislative and regulatory framework for non-bank deposit-taking financial institutions (NBFIs), Building Societies and Credit Unions. The expectation of the Act was that the NBFIs would cater to the household sector of the economy and that the two types of NBFI would retain different balance sheet structures. However, the new regulation regime caused credit unions to change their lending policy to emphasis mortgage, rather than personal loans, and thus comerge to similar structure to building societies.

A Review Of Australia's Compulsory Superannuation Scheme After A Decade

The Australian superannuation system places trustees in the key role of managing superannuation assets and we subject the role of trustee to close scrutiny while identifying the very substantial principal-and-agent problems that exist in the industry. We consider two policy issues: member choice of fund and portability of accumulated balances in the light of how they would improve the ability of individual members to maximise retirement benefits and the efficiency of the system. We argue that the award superannuation scheme which requires, by conditions in industrial awards, contributions of three per cent of wage or salary of an employee continues along side the SG scheme is due for review.

Sustainable Retirement: A Look At Consumer Desires

This paper examines the findings of the research project, 'Retirement Savings: Drivers and Desires', commissioned by the Investment and Financial Services Association Ltd (IFSA) in 2001. The paper investigates retirement savings decision-making and retirement income product stream choice. This paper presents a quantitative analysis of questionnaire data relating to decision-making and product stream choice and discusses these issues in the context of established research findings about retirement income. The paper consists of five sections. The first is a brief review of the 'Drivers and Desires' research project conducted in 2001. An important theme to emerge from the initial project was that participants reported a high level of risk aversion and a strong desire to obtain the publicly funded age pension. Based on the findings of the initial project, the remaining sections of this paper focuses on consumer preferences, particularly relating to risk aversion and demand for the age pension. The second section focuses on a specific issue emanating from the initial project, specifically the market for annuities. The third section considers retirement income streams in terms of risks to investors. The fourth section carries out a quantitative analysis of consumer preferences toward the identified risks in previous sections, and specifically considers various trade-offs in the decision-making process. The fifth section outlines various policy alternatives and issues for future consideration.

TESTING THE INCOMPLETE ARBITRATE HYPOTHESIS: EVIDENCE FROM AUSTRALIAN WHOLESALE SUPERANNUATION FUNDS

This paper tests the efficiency of capital markets when information is costly to obtain by analysing the performance of Australian wholesale superannuation funds specialising in the management of domestic equity portfolios from 1991 through 1999. Using a fund regression approach, the paper finds evidence that is consistent with an incomplete arbitrage function, with investment managers generating returns sufficiently high to compensate them for the increased costs of active asset selection. Risk-adjusted returns in the Australian superannuation fund industry, net of management fees and expenses, are comparable to the returns from a passive asset selection policy.Superannuation funds, Australia

A Review Of Australia's Compulsory Superannuation Scheme After A Decade

The Australian superannuation system places trustees in the key role of managing superannuation assets and we subject the role of trustee to close scrutiny while identifying the very substantial principal-and-agent problems that exist in the industry. We consider two policy issues: member choice of fund and portability of accumulated balances in the light of how they would improve the ability of individual members to maximise retirement benefits and the efficiency of the system. We argue that the award superannuation scheme which requires, by conditions in industrial awards, contributions of three per cent of wage or salary of an employee continues along side the SG scheme is due for review

Should Employees Have the Choice of Superannuation Fund?

We examine whether employees should have a choice of superannuation fund and whether this choice should be unrestricted. The basis of our examination is how can a contributor to a superannuation fund maximise their retirement balance. In doing so, we ask whether an employer can make a more informed choice about a superannuation fund than an empoloyee

Returns from Investing in Australian Equity Superannuation Funds, 1991 to 1999

This study tests the strong-form efficient market hypothesis for Australian equity superannuation fund returns from 1991 to 1999. The efficient market model is not rejected for the sample period, suggesting that passive asset selection is superior to any other strategy that creates greater information and execution expenses, as these costs are largely sunk. Moreover, Australian superannuation investors would achieve their returement income objectives more rapidly through a passive asset selection strategy