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Tax Reform and Retirement Saving Incentives: Take‐up of Stakeholder Pensions in the UK
Author(s) -
DISNEY RICHARD,
EMMERSON CARL,
WAKEFIELD MATTHEW
Publication year - 2010
Publication title -
economica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.532
H-Index - 65
eISSN - 1468-0335
pISSN - 0013-0427
DOI - 10.1111/j.1468-0335.2008.00749.x
Subject(s) - generosity , pension , incentive , private pension , stakeholder , labour economics , government (linguistics) , economics , pension fund , business , public economics , finance , market economy , political science , linguistics , philosophy , management , law
In April 2001, the UK government introduced Stakeholder Pensions – a new private pension arrangement. The reform also changed the structure of tax‐relieved pension contribution ceilings, increasing their generosity for lower‐earners. We examine the impact of these changes on private pension coverage using individual level data. We use a difference‐in‐differences strategy with an estimator that is modified to allow for dichotomous outcomes. Contrary to the conventional wisdom that the Stakeholder Pension reforms had little or no impact on saving behaviour, our results indicate that the change to the contribution ceilings affected private pension coverage rates among lower‐earners, especially among women.