Toward a National Default Option for Low Cost Superannuation

Accounting Research Journal, Vol. 22, No. 1 2009, pp. 46-67

22 Pages Posted: 17 Apr 2012

See all articles by Wilson N. Sy

Wilson N. Sy

Investment Analytics Research

Date Written: August 18, 2008

Abstract

This paper proposes an approach to design a national default option to maximize retirement savings in defined contribution superannuation, using a proportionate shareholding approach which minimizes total cost of investing for all investors.

The paper provides a new rationale for passive investing based on the hypothesis of market inefficiency. It also provides the first formal proof of the “Cost Matters Theorem”. The proposed idea of a national default option will create a simple, understandable and cost-effective alternative for all workers and will also provide a performance benchmark to encourage the development of a more competitive and efficient superannuation market.

Keywords: Default option, superannuation, cost, passive investing, indexing

Suggested Citation

Sy, Wilson N., Toward a National Default Option for Low Cost Superannuation (August 18, 2008). Accounting Research Journal, Vol. 22, No. 1 2009, pp. 46-67, Available at SSRN: https://ssrn.com/abstract=2040684

Wilson N. Sy (Contact Author)

Investment Analytics Research ( email )

12 Gilchrist Place
Balmain East, NSW 2041
Australia
0424669802 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
26
Abstract Views
361
PlumX Metrics