25 Aug 2018
We examine what full access to dividend imputation credits means for Australian retirees in two ways. First, we show that availability of imputation credits can justify a significant home bias towards Australian equities in retirement portfolios, largely at the expense of world equities. Second, we estimate the value of imputation credits to retirees, finding it could potentially support increased consumption during retirement of 5%-6%, or the equivalent of a higher balance at retirement by 8%-9%. Our study provides insights relevant for public policy.