Does the early release of retirement savings prolong labour market participation for workers approaching retirement? Evidence from Australia's 'Transition to Retirement Income Streams' program

Abstract

Australia's Transition to Retirement Income Streams (TRIS) program aims to prolong participation for older workers (age 55 to 65 years) by offering early access to a worker's compulsory retirement savings (superannuation). Using a difference-in-difference design, Our results suggest a small labour supply response which increases after the program's initial years. The size of the effects appear consistent with the program adoption profile which was low initially. For this reason, the results should be viewed as a lower bound on the true effects. We find individuals with higher incomes are more likely to adopt TRIS. At least half of program participants appear to be employing strategies to minimise tax, a behavioural response which seems at odds with the program's intent.