Journal of Family and Economic Issues

, Volume 39, Issue 1, pp 2–18 | Cite as

Voluntary Retirement Savings: The Case of Australia

  • Jun FengEmail author
Original Paper


The shift to defined contribution plans has increased concerns about retirement adequacy for the working population. Different from prior research in countries where retirement savings are voluntary, this study explored the drivers of additional savings within the Australian superannuation system where mandatory savings are in place. Results suggested that age, economic and financial status, and job characteristics are important indicators for voluntary superannuation savings. Affordability, false beliefs, and lack of awareness about retirement savings inhibit participation. Past saving habits and retirement planning positively affect voluntary retirement savings. Joint modelling of pre- and post-tax savings decisions suggested a substitution effect between the two, adding new evidence to the literature.


Retirement saving behavior Voluntary retirement savings Saving plan participation Mandatory retirement saving system Personal finance Consumer economics 

JEL classification

J32 D14 D03 



The author would like to thank the editor, four anonymous reviewers, Professor Christine Brown, Professor Hazel Bateman, and Catherine Barratt for their constructive suggestions and helpful comments that improved the quality and the exposition of the paper. The findings and views reported in the paper are of those of the author.

Compliance with Ethical Standards

Conflict of interest

The author declares that he has no conflict of interest.

Ethical Approval

This article does not contain any studies with human participants or animals performed by any of the authors.


  1. Agnew, J., Dalton, J. N., Bateman, H., & Thorp, S. (2013). Work, money, lifestyle: Plans of Australian retirees. JASSA: The Finsia Journal of Applied Finance, 2013(1), 40–44. Retrieved from;dn=285031117351561;res=IELBUS.
  2. Ali, P., Anderson, M. E., Clark, M., Ramsay, I., & Shekhar, C. (2014). Superannuation knowledge, behaviour and attitudes in young adults in Australia. CIFR Paper No. RP002/2014. Sydney: Centre for International Finance and Regulation. Retrieved from
  3. Antolin, P., Payet, S., & Yermo, J. (2012). Coverage of private pension systems: Evidence and policy options. OECD Working Papers on Finance, Insurance and Private Pensions, 20. doi: 10.1787/5k94d6gh2w6c-en.
  4. APRA. (2014). Annual superannuation bulletin, insight. Sydney, NSW: Australian Prudential Regulation Authority. Retrieved from
  5. Bailey, J. J., Nofsinger, J. R., & O’Neill, M. (2003). A review of major influences on employee retirement investment decisions. Journal of Financial Services Research, 23(2), 149–165. doi: 10.1023/a:1022889315782.CrossRefGoogle Scholar
  6. Bateman, H., Deetlefs, J., Dobrescu, L. I., Newell, B. R., Ortmann, A., & Thorp, S. (2014). Just interested or getting involved? An analysis of superannuation attitudes and actions. Economic Record, 90(289), 160–178. doi: 10.1111/1475-4932.12107.CrossRefGoogle Scholar
  7. Benito, A. (2006). Does job insecurity affect household consumption? Oxford Economic Papers, 58(1), 157–181. doi: 10.1093/oep/gpi041.CrossRefGoogle Scholar
  8. Bernheim, B. D. (2002). Chapter 18: Taxation and saving. In J. A. Alan & F. Martin (Eds.), Handbook of public economics (Vol. 3, pp. 1173–1249). Amsterdam: Elsevier. Retrieved from
  9. Beshears, J., Choi, J. J., Laibson, D., Madrian, B. C., & Milkman, K. L. (2015). The effect of providing peer information on retirement savings decisions. The Journal of Finance, 70(3), 1161–1201. doi: 10.1111/jofi.12258.CrossRefGoogle Scholar
  10. Chatterjee, S. (2010). Retirement savings of private and public sector employees: A comparative study. Journal of Applied Business Research, 26(6), 95–102.Google Scholar
  11. Chatterjee, S., & Zahirovic-Herbert, V. (2009). Retirement plan participation in the United States: Do public sector employees save more? European Journal of Social Sciences, 7(4), 30–40.Google Scholar
  12. Clark, R. L., Morrill, M. S., & Maki, J. (2011). Encouraging new hires to save for retirement. Working Paper No. WR- 892-SSA. Santa Monica: RAND. Retrieved from
  13. Collins, J. H., & Wyckoff, J. H. (1988). Estimates of tax-deferred retirement savings behavior. National Tax Journal, 41(4), 561–572. Retrieved from
  14. Commonwealth of Australia. (2009). Australia’s future tax system: Report to the treasurer. Canberra, ACT: Commonwealth Government Publisher. Retrieved from
  15. Copeland, C. (2010). Retirement plan participation: Survey of income and program participation (sipp) data, 2009. EBRI: Notes, 31(11). Retrieved from
  16. Copeland, C. (2014). Individual account retirement plans: An analysis of the 2013 survey of consumer finances. EBRI: Issue Brief, 406. Retrieved from
  17. Croy, G., Gerrans, P., & Speelman, C. (2010a). Injunctive social norms primacy over descriptive social norms in retirement savings decisions. International Journal of Aging and Human Development, 71(4), 259–282. doi: 10.2190/AG.71.4.a.CrossRefGoogle Scholar
  18. Croy, G., Gerrans, P., & Speelman, C. (2010b). The role and relevance of domain knowledge, perceptions of planning importance, and risk tolerance in predicting savings intentions. Journal of Economic Psychology, 31(6), 860–871. doi: 10.1016/j.joep.2010.06.002.CrossRefGoogle Scholar
  19. Croy, G., Gerrans, P., & Speelman, C. (2012). Normative influence on retirement savings decisions: Do people care what employers and the government want? Australian Journal of Psychology, 64(2), 83–91. doi: 10.1111/j.1742-9536.2011.00029.x.CrossRefGoogle Scholar
  20. Duflo, E., Gale, W., Liebman, J., Orszag, P., & Saez, E. (2006). Saving incentives for low- and middle-income families: Evidence from a field experiment with H&R block. The Quarterly Journal of Economics, 121(4), 1311–1346. doi: 10.1093/qje/121.4.1311.CrossRefGoogle Scholar
  21. Dummann, K. (2008). What determines supply and demand for occupational pensions in germany? Journal of Pension Economics and Finance, 7(2), 131–156. doi: 10.1017/s1474747208003557.CrossRefGoogle Scholar
  22. Eaton, D. H. (2002). The impact of the source of changes in marginal tax rates on participation in individual retirement accounts. The Journal of the American Taxation Association, 24(1), 46–59. doi: 10.2308/jata.2002.24.1.46.CrossRefGoogle Scholar
  23. Engelhardt, G. V., & Kumar, A. (2007). Employer matching and 401(k) saving: Evidence from the health and retirement study. Journal of Public Economics, 91(10), 1920–1943. doi: 10.1016/j.jpubeco.2007.02.009.CrossRefGoogle Scholar
  24. Enis, C. R. (2010). Savings and framing effects on participation in individual retirement accounts: More evidence from tax return data. In T. Stock (Ed.), Advances in taxation (Vol. 19, pp. 29–64). Bradford: Emerald Group Publishing Limited.CrossRefGoogle Scholar
  25. Even, W. E., & Macpherson, D. A. (2000). The changing distribution of pension coverage. Industrial Relations, 39(2), 199–227. doi: 10.1111/0019-8676.00163.Google Scholar
  26. Even, W. E., & Macpherson, D. A. (2005). The effects of employer matching in 401(k) plans. Industrial Relations, 44(3), 525–549. doi: 10.1111/j.0019-8676.2005.00399.x.Google Scholar
  27. Feng, J. (2014). The effect of superannuation tax incentives on salary sacrifice participation. Economic Record, 90(s1), 59–73. doi: 10.1111/1475-4932.12131.CrossRefGoogle Scholar
  28. Gough, O., & Niza, C. (2011). Retirement saving choices: Review of the literature and policy implications. Journal of Population Ageing, 4(1), 97–117. doi: 10.1007/s12062-011-9046-4.CrossRefGoogle Scholar
  29. Guariglia, A., & Markose, S. (2000). Voluntary contributions to personal pension plans: Evidence from the British household panel survey. Fiscal Studies, 21(4), 469–488. doi: 10.1111/j.1475-5890.2000.tb00032.x.CrossRefGoogle Scholar
  30. Hardy, M. A., & Shuey, K. (2000). Pension decisions in a changing economy. Journals of Gerontology Series B: Psychological Sciences and Social Sciences, 55(5), S271–S277. doi: 10.1093/geronb/55.5.S271.CrossRefGoogle Scholar
  31. Huberman, G., Iyengar, S. S., & Jiang, W. (2007). Defined contribution pension plans: Determinants of participation and contributions rates. Journal of Financial Services Research, 31(1), 1–32. doi: 10.1007/s10693-007-0003-6.CrossRefGoogle Scholar
  32. Joulfaian, D., & Richardson, D. (2001). Who takes advantage of tax-deferred saving programs? Evidence from federal income tax data. National Tax Journal, 54(3), 669–688. Retrieved from
  33. Kusko, A. L., Poterba, J. M., & Wilcox, D. W. (1994). Employee decisions with respect to 401(k) plans: Evidence from individual-level data. Working Paper No. w4635. Cambridge: National Bureau of Economic Research. Retrieved from
  34. Lusardi, A., & Mitchell, O. S. (2011). Financial literacy and planning: Implications for retirement wellbeing. Working Paper No. w17078. Cambridge: National Bureau of Economic Research. Retrieved from
  35. Mackenzie, S. (2008). The impact of the financial crisis on older americans. Washington, DC: AARP Public Policy Institute. Retrieved from
  36. Merton, R. C. (1969). Lifetime portfolio selection under uncertainty: The continuous-time case. The Review of Economics and Statistics, 51(3), 247–257. doi: 10.2307/1926560.CrossRefGoogle Scholar
  37. Mitchell, O. S., Piggott, J., Sherris, M., & Yow, S. (2006). Financial innovation for an aging world. Working Paper No. w12444. Cambridge: National Bureau of Economic Research. Retrieved from
  38. Mitchell, O. S., Utkus, S. P., & Yang, T. (2007). Turning workers into savers? Incentives, liquidity, and choice in 401(k) plan design. National Tax Journal, 60(3), 469–489. Retrieved from
  39. Modigliani, F., & Brumberg, R. (1954). Utility analysis and the consumption function: An interpretation of cross-section data. In K. K. Kurihara (Ed.), Post-keynesian economics. New Brunswick, NJ: Rutgers University Press.Google Scholar
  40. Munnell, A. H., Sunden, A., & Taylor, C. (2001). What determines 401(k) participation and contributions? Social Security Bulletin, 64(3), 64–75.Google Scholar
  41. Papke, L. E. (2004). Choice and other determinants of employee contributions to defined contribution plans. Social Security Bulletin, 65(2), 59–68.Google Scholar
  42. Papke, L. E., & Poterba, J. M. (1995). Survey evidence on employer match rates and employee saving behavior in 401(k) plans. Economics Letters, 49(3), 313–317. doi: 10.1016/0165-1765(95)00683-7.CrossRefGoogle Scholar
  43. Pfeifer, C. (2011). Risk aversion and sorting into public sector employment. German Economic Review, 12(1), 85–99. doi: 10.1111/j.1468-0475.2010.00505.x.Google Scholar
  44. Poterba, J. M., Venti, S. F., & Wise, D. A. (1998). 401 (k) plans and future patterns of retirement saving. American Economic Review, 88(2), 179–184. Retrieved from
  45. Power, L., & Rider, M. (2002). The effect of tax-based savings incentives on the self-employed. Journal of Public Economics, 85(1), 33–52. doi: 10.1016/S0047-2727(01)00092-5.CrossRefGoogle Scholar
  46. Purcell, P. (2009). Retirement plan participation and contributions: Trends from 1998 to 2006. Washington, DC: Congressional Research Service. Retrieved from
  47. Rhee, N. (2013). The retirement savings crisis: Is it worse than we think? Washington, DC: National Institute on Retirement Security. Retrieved from
  48. Rutledge, M. S., Wu, A. Y., & Vitagliano, F. M. (2014). Do tax incentives increase 401(k) retirement saving? Evidence from the adoption of catch-up contributions. CRR WP 2014-17. Chestnut Hill: Center for Retirement Research, Boston College. Retrieved from
  49. Shanker, A., & Vidler, S. (2014). Offsets to compulsory superannuation: Do people consciously choose their level of retirement saving? CAMA Working Paper 65/2014. Canberra: Centre for Applied Macroeconomic Analysis, ANU. Retrieved from
  50. Shuey, K. M. (2004). Worker preferences, spousal coordination, and participation in an employer-sponsored pension plan. Research on Aging, 26(3), 287–316. doi: 10.1177/0164027503262476.CrossRefGoogle Scholar
  51. Shuey, K. M., & O’Rand, A. M. (2006). Changing demographics and new pension risks. Research on Aging, 28(3), 317–340. doi: 10.1177/0164027505285919.CrossRefGoogle Scholar
  52. Skinner, J. (1991). Individual retirement accounts: A review of the evidence. Working Paper No. w3938. Cambridge: National Bureau of Economic Research. Retrieved from
  53. Smith, H. L., & Griesdorn, T. (2014). Do saving rules influence self-employed households’ participation in tax-deferred retirement plans? Family and Consumer Sciences Research Journal, 43(1), 47–60. doi: 10.1111/fcsr.12080.CrossRefGoogle Scholar
  54. Smith, K. E., Johnson, R. W., & Muller, L. A. (2004). Deferring income in employer-sponsored retirement plans: The dynamics of participant contributions. National Tax Journal, 57(3), 639–662. Retrieved from
  55. Springstead, G. R., & Wilson, T. M. (2000). Participation in voluntary individual savings accounts: An analysis of iras, 401(k)s, and the tsp. Social Security Bulletin, 63(1), 34–39.Google Scholar
  56. Stawski, R. S., Hershey, D. A., & Jacobs-Lawson, J. M. (2007). Goal clarity and financial planning activities as determinants of retirement savings contributions. International Journal of Aging and Human Development, 64(1), 13–32. doi: 10.2190/13GK-5H72-H324-16P2.CrossRefGoogle Scholar
  57. Thaler, R. H., & Shefrin, H. M. (1981). An economic theory of self-control. Journal of Political Economy, 89(2), 392–406. Retrieved from
  58. UN. (2016). World population prospects: The 2015 revision. New York: United Nations. Retrieved from
  59. Van Dalen, H. P., Henkens, K., & Hershey, D. A. (2010). Perceptions and expectations of pension savings adequacy: A comparative study of dutch and american workers. Ageing and Society, 30(5), 731–754. doi: 10.1017/S0144686X09990651.CrossRefGoogle Scholar
  60. Venti, S. F., & Wise, D. A. (1988). The determinants of ira contributions and the effect of limit changes. In Z. Bodie, J. B. Shoven & D. A. Wise (Eds.), Pensions in the US Economy. Chicago: University of Chicago Press.Google Scholar
  61. Whitehouse, E., D’Addio, A., Chomik, R., & Reilly, A. (2009). Two decades of pension reform: What has been achieved and what remains to be done. Geneva Papers on Risk and Insurance: Issues and Practice, 34(4), 515–535. doi: 10.1057/gpp.2009.30.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Department of Banking and Finance, Monash Business SchoolMonash UniversityCaulfield EastAustralia

Personalised recommendations