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June 2022

US. Are Retirement Savings Tax Incentives Leaving the Middle Class Behind?

A new report by the National Institute on Retirement Security highlights the insufficiencies of current tax incentives in ensuring retirement security for the middle class. It includes marginal tax rates, retirement plan participation and income distribution on retirement savings levels as culpable factors. The report, “The Missing Middle: How Tax Incentives for Retirement Savings Leave Middle Class Families Behind,” also offers potential solutions that could enhance retirement security for middle-class families. Saving for retirement is one of the biggest financial challenges...

How the U.S. retirement system shortchanges the middle class

America has a vast and elaborate system of public policies supposedly designed to help us all save for retirement and avoid the catastrophe of a penurious and poverty-stricken old age. But does this system end up shortchanging the middle class that is the backbone of the country and the economy? That’s the accusation of a new report from the National Institute for Retirement Security, a nonpartisan think-tank. It’s hard to argue they’re wrong. Read also Governance Issues Loom Over US Pension...

May 2022

Progressing Towards Efficiency: The Role for Labor Tax Progression in Reforming Social Security

By Krzysztof Makarski, Joanna Tyrowicz & Oliwia Komada We study interactions between progressive labor taxation and social security reform. Increasing longevity puts fiscal strain that necessitates the social security reform. The current social security is redistributive, thus providing (at least partial) insurance against idiosyncratic income shocks, but at the expense of labor supply distortions. A reform which links pensions to individual incomes reduces distortions associated with social security contributions, but incurs insurance loss. We show that the progressive labor tax...

Top-Income Adjustments and Official Statistics on Income Distribution: The Case of the UK

By Stephen P. Jenkins UK official statistics on income distribution have incorporated top-income adjustments to household survey data since 1992. This article reviews the work undertaken by the Department for Work and Pensions and the Office for National Statistics, and the academic research that influenced them, and reflects on the lessons to learn from the UK experience. Source: SSRN 256 views

More tax for thousands of retirees in South Africa

Thousands of retirees will find lower-than-expected pensions in their bank accounts at the end of this month owing to higher tax deductions. Thousands more already had this experience at the end of last month. This is as a result of administrators implementing tax directives issued by the South African Revenue Service (SARS) in an attempt to ensure the correct tax is collected upfront from retirees who receive more than one pension or a pension and salary income, said consumer financial...

April 2022

Changes in Retirement Savings during the COVID Pandemic

By Elena Derby, Lucas Goodman, Kathleen Mackie, & Jacob Mortenson This paper documents changes in retirement saving patterns at the onset of the COVID-19 pandemic. We construct a large panel of U.S. tax data, including tens of millions of person-year observations, and measure retirement savings contributions and withdrawals. We use these data to document several important changes in retirement savings patterns during the pandemic years relative to the years preceding the pandemic or the Great Recession. First, unlike during the...

February 2022

The Taxation of Pensions

By Robert Holzmann & John Piggott Theoretical and policy perspectives on the taxation of pension, viewed in an international context. Policy makers and academic researchers have been preoccupied in recent decades with the design of pension schemes and effective pension system reform. Relatively little attention has been given to the taxation of pensions and, more broadly, the provision of retirement income. In this book, experts from a range of countries explore the interconnection. Their contributions are especially timely, given recent demographic...

January 2022

UK. Lack of guidance for pension savers risks freedoms ‘failure’, MPs warn

A Work and Pensions Committee report calls on Government and regulators to play more active role in supporting savers to make better decisions about their money. The Government should commit to trial of automatic Pension Wise guidance appointments and set a target of at least 60% needed to boost uptake of pensions guidance and advice Automatic appointments with the Pension Wise service should be trialled as part of a renewed commitment from the Government to support people to make better decisions...

UK. Double tax whammy risk for big pension withdrawals

Thousands of people in the UK are at risk of being hit with huge tax bills when they enter drawdown, insurance provider NFU Mutual has warned. The firm analysed data from the Financial Conduct Authority (FCA) showing that in 2020-21 around 15,296 pension pots worth more than £50,000 ($66,144, €58,500) were fully withdrawn. Worryingly, 61.3% of those who cashed out did so without seeking financial advice, up from the 58.9% of the previous year. A similar trend was also registered for pots...

December 2021

EU Pension Taxation: Removing Another Brick in the Wall?

By Hans van Meerten & Philip Bennett On 11 November 2021, the Court of Justice (Third Chamber) decided the case of MH and ILA (Pension rights in case of bankruptcy)(C-168/20). There was no Opinion by the Advocate-General. Although usually a sign thatthe case was not that important,there are exceptions.This seems one o them. This stems from a reference from the High Court of Justice of England and Wales (‘the High Court’) to the Court of Justice. The referred question related to...