Retirement Savings Incentives for Low- and Middle-Income Individuals: Does Government Funded Matching Change Behaviour?

We evaluate a government-funded matching policy for retirement savings contributions targeted at low- and middle-income individuals. Using a difference-in-difference approach, we exploit administrative changes to the Australian Government's retirement contribution matching (co-contribution) policy to identify the impact of the programme on savings behaviour. A reduction in the income eligibility threshold led to a 0.9 percentage point decline in the share of individuals who made a contribution and a 6.3 per cent decrease in the value of retirement contributions. Conditional on making a non-concessional (post-tax) contribution prior to the change in eligibility rules, the average value of individual contributions declined by between 16 and 22 per cent.