Larissa Evans opened the meeting with acknowledgement of country, welcomed members and introduced Andrew Carter who was representing the Tax and Transfer Policy Institute (TTPI).
Andrew presented findings from a TTPI working paperExternal Link on the impact of early release of retirement savings – through Transition to Retirement Income Streams (TRIS) on labour market participation for those approaching retirement.
Andrew provided background and context for his presentation and basis for the analytics life cycle model that has been developed by TTPI.
The model analysed the effect of TRIS behaviour on labour supply markets over time, showing when individuals have chosen to draw down on TRIS. Andrew discussed the adoption results for different age groups, from when TRIS was introduced in 2007 and demographics of those who were likely to adopt TRIS.
Analysis of results from the model confirms the size of the effects are consistent with the program adoption profile which was low initially. Other results from the model show:
- individuals with higher incomes are more likely to adopt TRIS
- it took time for workers to understand and adopt the policy 'A learning effect'
- small labour supply effects appear to increase after the program’s initial years
- first year – no effect
- second year – around 1% for males only
- third year – up to 1.4% for males and 1.1% for females
- tax-free TRIS effect for over 60s in 2007–08 was increased to 2.5% for males and 1.3% for females.
In conclusion, Andrew noted:
- it was difficult to ascertain how many people were using TRIS as policy makers envisaged (that is, reducing labour market engagement while topping up their salary with TRIS as they approach retirement) given ‘hours worked’ data is not available/reported
- high income earners have more to gain from TRIS or utilise ‘tax effective strategies'.
Larissa thanked Andrew for presenting to the Superannuation Industry Stewardship Group.Summary of key topics discussed at the Superannuation Industry Stewardship Group special briefing 10 June 2021.