2 Voluntary retirement module specification As part of its research on the Commission has Superannuation Policy for PostRetirement developed a model referred to as the Productivity Commission Retirement Model — (PCRM) to assess the effects of increasing the preservation age. The PCRM can be — described as a ‘behavioural microsimulation’ model. Behavioural microsimulation models seek to simulate individual or household level decisions, and are commonly used within an economic framework to assess the impact of policy changes (such as changes in tax and benefits) on and on labour supply. They are particularly governments’ fiscal positions useful where there is a wide variety of decision makers, and where complex policy changes are likely to impact these different decision makers in different ways. The model consists of three modules: Commission’s which seeks to gauge the behaviour of individuals who a voluntary retirement module, have some discretion in how they respond to policy changes which seeks to account for those individuals who do an involuntary retirement module, not get to exercise choice around the timing of their retirement which seeks to weight the outcomes from the voluntary and a projection module, involuntary retirement modules, both now and in the future. The role of this paper is to provide additional detail on the voluntary retirement module. Households types The voluntary retirement module consists of 120 households for a given age grouped into 12 household types (table 2.1). Households of the same type are identical (they have the same earnings, savings rates and drawdown rates) except in their preferences for nonwork activities.
2 Voluntary retirement module specification As part of its research on Superannuation Policy for PostRetirement the Commission has developed a model — referred to as the Productivity Commission Retirement Model (PCRM) — to assess the effects of increasing the preservation age. The PCRM can be described as a ‘behavioural microsimulation’ model. Behavioural microsimulation models seek to simulate individual or household level decisions, and are commonly used within an economic framework to assess the impact of policy changes (such as changes in tax and benefits) on governments’ fiscal positions and on labour supply. They are particularly useful where there is a wide variety of decision makers, and where complex policy changes are likely to impact these different decision makers in different ways. The Commission’s model consists of three modules: a voluntary retirement module, which seeks to gauge the behaviour of individuals who have some discretion in how they respond to policy changes an involuntary retirement module, which seeks to account for those individuals who do not get to exercise choice around the timing of their retirement a projection module, which seeks to weight the outcomes from the voluntary and involuntary retirement modules, both now and in the future. The role of this paper is to provide additional detail on the voluntary retirement module. Households types The voluntary retirement module consists of 120 households for a given age grouped into 12 household types (table 2.1). Households of the same type are identical (they have the same earnings, savings rates and drawdown rates) except in their preferences for nonwork activities.
02-super-post-retirement-modelling2-specification.docx