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Stuart Anderson

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Does not include any pensioners paid by Department of Veterans' Affairs. ... Marstaus = Marital status (couple, single or widowed) Sex = Male and Female ... – PowerPoint PPT presentation

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Title: Stuart Anderson


1
Presented by
  • Stuart Anderson Martin Ly
  • Seniors and Means Test Branch

2
Retirement incomesAn analysis of the take-up
ofincome streams by Age Pensioners
3
Todays presentation
  • Purpose
  • What is an Income Stream?
  • Scope
  • Results and findings
  • Conclusions

4
Purpose
  • To analyse the characteristics of age pensioners
    who purchased income streams from 1 July 1984 to
    30 June 2004.

5
What is an income stream?
  • An income stream is a financial product that pays
    a regular stream of income payments in exchange
    for a lump sum.
  • There are two types pensions and annuities.

6
Social security treatment
  • Social security treatment depends on the income
    streams characteristics.
  • The social security legislation groups income
    stream products into three main categories
  • Asset test exempt (ATE) income streams
  • Asset-tested income streams (long term)
  • Asset-tested income streams (short term)

7
Scope 1
The paper examines
  • Number of income streams, average purchase price,
    gender, age pensioners assessable assets,
    marital status, and whether the product was
    purchased from a small fund (eg SMSF or SAF).
  • Linear regression modelling of the relationships
    between average purchase prices and customers
    demographic, financial and other characteristics.

8
Scope 2
  • Covers age pensioners paid by Centrelink. Does
    not include any pensioners paid by Department of
    Veterans Affairs.
  • Does not include age pensioners who are no longer
    on age pension, or do not currently qualify.

9
Scope 3
  • The current income stream categories were applied
    as though they existed throughout the time period
    to ensure consistency.
  • Defined benefit income streams are excluded from
    the analysis.

10
Take-up of income streams between 1984-05 and
2003-04
3. TREATMENT CHANGED ON 20/9/98
4. DROP IN TAKE-UP OF ALLOCATED PRODUCTS
1. ALLOCATED PRODUCTS GIVEN ATE STATUS
2. ALLOCATED PRODUCTS BECOME ASSET TESTED
11
Average age at purchase
  •  

12
Comparison of purchase price
ATE Non-ATE
Women Men Women Men
1998-99 59,442 66,025 78,055 90,979
2003-04 94,247 95,765 95,011 105,380
Change 34,805 29,740 16,956 14,401
13
Multiple linear regression model
  • LogPurchamt Intercept ß1Totass ß2Inctest
  • ß3Entryage ß4Sqge ß5Sex ß6Marstatus
  • ß7HomeID ß8SMSF ß9ProType ß10AgeGroup
    ß11Case
  • ß12TotassEntryage ß13 Totasssex
    ß14TotassMarstatus ß15TotassHomeID
  • ß16Totass SMSF ß17TotassProType

14
Main independent variables
Asstest Total assessable assets

Inctest Total assessable income

Entryage Age when income stream purchased

Sex Male and Female

HomeID Homeownership status (homeowner or
non-homeowner)
Marstaus Marital status (couple, single or
widowed)

ProType Income stream category (ATE or non-ATE)


15
Predicted average purchase price for income
streams purchased by partnered individuals
Homeowner Non-Homeowner
Non-ATE 88,700 93,800
ATE 67,500 71,000
16
Conclusions
  • Income streams are becoming increasingly popular
    with age pensioners.
  • Age pensioners are investing more money in income
    streams.
  • Expect that income streams will continue to grow
    in importance for retirees.

17
Comments and feedback
  • We would appreciate feedback. Please feel free
    to speak to us during the Colloquium or else
    contact us at
  • Stuart Anderson
  • Email stuart.anderson_at_facs.gov.au
  • Phone 02 6244 8605
  • Martin Ly
  • Email Martin.Ly_at_facs.gov.au
  • Phone 02 6244 6224
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