Are Targeted Matching Schemes Effective in Stimulating Retirement Savings?

Concerns over the adequacy of retirement incomes have led governments to incentivise low- and middle-income earners to contribute more to private pensions.

Concerns over the adequacy of retirement incomes have led governments to incentivise low- and middle-income earners to contribute more to private pensions. In this study we exploit several reforms using a simulated instruments approach and administrative data to estimate the impacts of a targeted national contribution-matching scheme in Australia across 50%, 100% and 150% match rates. Overall, we find that responses increase with the match rate, are modest in size and are mostly unwound when eligibility is lost. Sub-group analysis highlights the possibility that responses are limited by liquidity constraints. We find little evidence that the scheme crowds-out other savings.