April 2022

Changes in Retirement Savings during the COVID Pandemic
11Apr

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...

April 11, 2022
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February 2022
11Feb

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...

February 11, 2022
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January 2022
18Jan

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...

January 18, 2022
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12Jan

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(FCA) showing that in 2020-21 around 15,296 pension pots worth more than £50,000 ($66,144, €58,500) were fully withdrawn.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...

January 12, 2022
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December 2021
03Dec

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...

December 3, 2021
Articles, Pension design, , ,
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November 2021
05Nov

The Economic Burden of Pension Shortfalls: Evidence from House Prices

By Darren Aiello, Asaf Bernstein, Mahyar Kargar, Ryan Lewis & Michael Schwert U.S. state pensions are underfunded by trillions of dollars, but their economic burden is unclear. In a model of inefficient taxation, real estate fully reflects the cost of pension shortfalls when it is the only form of immobile capital. We study the effect of pension shortfalls on real estate values at state borders, where labor and physical capital could more easily relocate to a state with a smaller...

November 5, 2021
Articles, Pension design, , , , ,
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05Nov

Pensions, Income Taxes and Homeownership: A Cross-Country Analysis

By Hans Fehr, Maurice Hofmann & George Kudrna This paper studies the role of pensions and income taxes in determining homeownership and household wealth. It provides a cross-country analysis, using tax and pension policy designs in Germany, the US and Australia. These developed nations have similar incomes per capita but very different homeownership rates, with the US and Australia having much higher homeownership compared to Germany. The question is to what extent the observed differences in homeownership are induced by...

November 5, 2021
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October 2021
18Oct

UK. Survey highlights lack of pension tax awareness amongst DC savers

Over a third (38 per cent) of defined contribution (DC) pension scheme members aged 50-65 are unaware of their tax-free pension allowance, a survey from Hymans Robertson has found. The research found that a further 32 per cent believed, incorrectly, that they can withdraw their entire pensions pot without paying tax, whilst nearly a fifth (17 per cent) wrongly believe that they do not have to pay any tax on income from their pension. Hymans Robertson partner, Kathryn Fleming, said that...

October 18, 2021
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September 2021
30Sep

Do Tax Deferred Accounts Improve Lifecycle Savings? Experimental Evidence

By John Duffy, Yue Li Tax deferred accounts (TDAs) are an increasingly popular method of saving for retirement, and have become common across many developed countries. Nevertheless, it is unclear whether TDAs actually improve a household's lifecycle savings behavior and retirement preparedness because it is difficult to perform a counterfactual analysis. Households always have other means of savings so there is no guarantee that a TDA, with its inflexible restriction that funds cannot be drawn until retirement, will be attractive...

September 30, 2021
Articles, Pension design, Savings, ,
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30Sep

Progressive Pensions as an Incentive for Labor Force Participation

By Fabian Kindermann, Veronika Pueschel In this paper, we challenge the conventional idea that an increase in the progressivity of old-age pensions unanimously distorts the labor supply decision of households. So far, the literature has argued that higher pension progressivity leads to more redistribution and insurance provision on the one hand, but increases implicit taxes and therefore distorts labor supply choices on the other. In contrast, we show that a well-designed reform of the pension system has the potential to...

September 30, 2021
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