RESEARCH PROJECTS

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RESEARCH PROJECTS

Despite the disruptions associated with the restructuring of our Centre, our researchers published papers on a number of major research projects during 2019 (see below). They launched a series of new projects that will be the subject of further papers in the months and years ahead (see under ‘Ongoing research projects’).

PITFALLS IN THE RETIREMENT SYSTEM AND SOME THOUGHTS ABOUT RISK, REWARD AND REMEDIATION

ROGER COHEN, UMMUL RUTHBAH

The Australian retirement system is highly regarded by world standards. Despite this, there are anomalies in the system that could be removed or improved to produce better outcomes for both retirees and the government. This paper illustrates how the three pillars of the Australian retirement system – the age pension, superannuation and savings – interact. It is well known that this interaction can lead to unintended outcomes relating to savings and investment behaviour which, ultimately, can be detrimental to retirees and increase the fiscal burden on the government.

We introduce a framework for potential alternatives that address some of these anomalies and lead to better outcomes for retirees and the government. The main proposal is to use superannuation to fund a compulsory defined benefit scheme, which, coupled with government assistance, could fund a universal pension.

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GROWTH ASSETS OF PENSION FUNDS AND PENSION SYSTEM’S ADEQUACY AND SUSTAINABILITY

NGA PHAM

This paper investigates the possible downside of the trend towards ESG by examining how this approach to investing might affect market efficiency. Consistent with salience theory, this over-emphasis on ESG results in the market overreacting to news about ESG controversies. Contrarian investors are likely able to profit from the unpopular strategy of buying stocks after bad ESG news is released.

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ASSET ALLOCATION OF PENSION FUNDS: MMGPI 2018

NGA PHAM

The primary objective of funded pension arrangements is to provide adequate incomes for retirement. Pension contributions and the investment returns accumulated in a fund during an individual’s working life and retirement years are the key factors that affect retirement incomes. The asset allocation of pension plans drives long-term pension investment returns.

As asset allocation strategies of pension funds around the world are so diverse, ACFS dedicated a special report to the asset allocation of pension funds based on data collected by the Melbourne Mercer Global Pension Index (MMGPI) project from 2009 to 2018. The report’s main objective is to enhance understanding of this diversity, its drivers and implications.

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