New academic research has found that the franking credits on dividends boosts consumption in retirement by 5%-6% – the equivalent of a 8%-9% higher balance at retirement.
The paper What Dividend Imputation Means for Retirement Savers was written by three academics at the ANU. “Our results highlight that dividend imputation makes a significant difference to retirement savers, both in terms of how they might structure their portfolios, and the value that it generates.”
The researchers note Labor’s policy of stopping refunding excess franking credits, saying “such a policy change could potentially end, or at least limit, access to imputation credits for Australian retirees”. Though the research does not model Labor’s policy, instead taking a broader view look at franking credits.