Moreover, innovative Australian insurance companies and superfunds could also purchase such bonds to better hedge their retail retirement income products thereby mass-marketing this – cash flow profile. Using SeLFIES to Create Flagship CIPRs In separate research, we have shown how SeLFIES can be combined with other risky assets to create products that can ensure guaranteed retirement income (i.e., the amount invested in SeLFIES) and attempt to raise returns/lower contributions. Innovative investment operations can be used to dynamically hedge and target a retirement income that a participant might have. Further, safe harbor can be provided to those Flagship CIPRs that achieve the client’s target retirement income, thereby ensuring that safe harbor is based on outcome as opposed to investment process. Summary These securities are a good deal for governments, too. In fact, governments are the biggest beneficiaries. SeLFIES not only improve retirement outcomes for all defined contribution (DC) plans, but also have spill-over benefits for governments. First, cash flows from SeLFIES reflect synergistic cash flows for infrastructure spending: namely, large cash flows upfront for capital expenditure, followed by delayed, inflation-indexed revenues, once projects are online. Second, SeLFIES give governments a natural hedge of revenues against the bonds, through value-added taxes (VATs). Australia has a goods and services tax (GST), which is a value added tax of 10% on most goods and services sales, with some exemptions (such as for certain food, healthcare and housing items) and concessions (including qualifying long term accommodation which is taxed at an effective rate of 5.5%). The looming retirement crisis needs to be addressed by timely innovation, because the longer that governments wait, the higher the cost to the taxpayer. SeLFIES improve retirement security, fund infrastructure and can be created immediately, at low cost! They also allow the Australian government to ensure that superannuation trustees can achieve their retirement income convenant and all the goals of an effective and Flagship CIPR.
Moreover, innovative Australian insurance companies and superfunds could also purchase such bonds to better hedge their retail retirement income products – thereby mass-marketing this cash flow profile. Using SeLFIES to Create Flagship CIPRs In separate research, we have shown how SeLFIES can be combined with other risky assets to create products that can ensure guaranteed retirement income (i.e., the amount invested in SeLFIES) and attempt to raise returns/lower contributions. Innovative investment operations can be used to dynamically hedge and target a retirement income that a participant might have. Further, safe harbor can be provided to those Flagship CIPRs that achieve the client’s target retirement income, thereby ensuring that safe harbor is based on outcome as opposed to investment process. Summary These securities are a good deal for governments, too. In fact, governments are the biggest beneficiaries. SeLFIES not only improve retirement outcomes for all defined contribution (DC) plans, but also have spill-over benefits for governments. First, cash flows from SeLFIES reflect synergistic cash flows for infrastructure spending: namely, large cash flows upfront for capital expenditure, followed by delayed, inflation-indexed revenues, once projects are online. Second, SeLFIES give governments a natural hedge of revenues against the bonds, through value-added taxes (VATs). Australia has a goods and services tax (GST), which is a value added tax of 10% on most goods and services sales, with some exemptions (such as for certain food, healthcare and housing items) and concessions (including qualifying long term accommodation which is taxed at an effective rate of 5.5%). The looming retirement crisis needs to be addressed by timely innovation, because the longer that governments wait, the higher the cost to the taxpayer. SeLFIES improve retirement security, fund infrastructure and can be created immediately, at low cost! They also allow the Australian government to ensure that superannuation trustees can achieve their retirement income convenant and all the goals of an effective and Flagship CIPR.
c2018-t285219-Merton-and-Dr-Muralidhar.docx