Doctor of Philosophy(PhD) / Retirement income policy in Australia has undergone significant changes over the last two decades, including the introduction of the Superannuation Guarantee [SG] with mandatory contributions in 1992 and the 2007 superannuation changes with the benefit tax abolition. Numerical implications of adopted pension reforms and reform proposals such as further increases in the SG contribution rate, changes to superannuation taxation and to means-testing of the age pension have been examined mainly by micro-simulation models. These models, often criticized for their lack of theoretical content, provide an incomplete picture of pension policy effects because of no or limited behavioural responses to underlying policy changes. In this thesis, models based on the life-cycle theory of saving pioneered by Modigliani and Brumberg (1954) are applied to simulate behavioural, welfare and macroeconomics effects of proposed changes to Australia’s pension policy. In particular, this thesis develops the following computable models: a life-cycle, single household model, a partial equilibrium, household model and a general equilibrium model with overlapping generations [OLG]. The single household model describes lifetime behaviour of the utility-maximising single household with uncertain lifespan. The model features perfect capital markets, endogenous labour supply and retirement decisions, and it incorporates main aspects of Australia’s pension and income tax policy settings. The simulated policy changes are (i) increase in the SG contribution rate, (ii) superannuation tax changes and (iii) abolition of the age pension means test. The results indicate higher retirement consumption and welfare gains from all the analysed pension policy changes. Partial equilibrium and general equilibrium models introduced in this thesis are built on lifetime behaviour of the single household. Both models distinguish many generations of households by age and, therefore, are capable of studying behavioural and welfare effects of policy changes for different generations. The partial equilibrium model examines behaviour of the household sector in the environment of the fixed factor prices. It is shown, for instance, that welfare gains from the investigated pension policy changes are not uniformly distributed across generations. The general equilibrium OLG model extends the partial equilibrium analyses by incorporating production, government and foreign sectors in addition to household and pension sectors. The model is a small open economy version of Auerbach and Kotlikoff’s (1987) OLG model. The simulation results are significantly different from those in the partial equilibrium framework, driven mainly by the changes in aggregate labour supply. For instance, the higher SG rate policy increases aggregate assets and saving. However, the saving increases are exported abroad rather than invested in the domestic capital stock. Hence, the implications of this policy change for the capital stock and output are minimal. Younger cohorts and future born generations experience consumption and welfare gains but older cohorts are negatively affected by a higher consumption tax rate resulting from this hypothetical policy change.