Means-Testing Retirement Benefits in the UK: Is it Efficient?

Fehr, Hans; Uhde, Johannes

doi:10.2139/ssrn.2414480

Cited by 4 publications

(4 citation statements)

References 15 publications

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“…When eligibility for social benefits are means-tested against private wealth, it could result in so-called 'saving traps', i.e. households could be discouraged to save so as to remain below the asset threshold (Alcock & Pearson, 1999;Fehr & Uhde, 2013;Jäntti et al, 2008;Sefton et al, 2008). Hence, while the aim of new asset policies would be to encourage the poor to accumulate assets, proper means-testing punishes them for owning such assets.…”

Section: Conclusion and Policy Discussionmentioning

confidence: 99%

The Truly Vulnerable: Integrating Wealth into the Measurement of Poverty and Social Policy Effectiveness

Kuypers

Marx

2018

Soc Indic Res

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Any opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity. The IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world's largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. There is a burgeoning literature on the significance and distribution of wealth in the rich world. It mainly focuses on the top. Wealth remains remarkably absent from the analysis of poverty and the redistributive effectiveness of welfare systems. This paper shows that real and financial assets can matter greatly when making assessments of who is poor and financially vulnerable. We introduce the concept of triple precariousness, afflicting households that not only have low income but also very low or non-existent assets to draw on for consumption needs, especially liquid assets. We analyse whether these households -whom we might call the truly vulnerable -have different characteristics from those that we identify as poor or needy on the basis of pure income based metrics. In an analysis for Belgium drawing on HFCS data, we show that households with a reference person that is young, unemployed, low educated, migrant, parent of dependent children, and above all a tenant are especially vulnerable in terms of their financial situation. By contrast, our assessment of the extent and depth of financial need among the elderly -a segment of society that is at a relatively high risk of income poverty -also changes. A substantial share of income poor elderly households own significant assets. We draw out some tentative consequences of these findings for anti-poverty and redistributive policies. Terms of use: Documents in JEL Classification:D31, G11

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Section: Conclusion and Policy Discussionmentioning

confidence: 99%

The Truly Vulnerable: Integrating Wealth into the Measurement of Poverty and Social Policy Effectiveness

Kuypers

Marx

2018

Soc Indic Res

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“…This is similar to reducing the lump sum taxation in period t, thus resembling specifications of Fehr and Uhde (2014), Van De Ven (2009), Sefton et al (2008).…”

Section: Bequestsmentioning

confidence: 69%

“…For example, if bequests are evenly distributed amongst all cohorts, this is similar to a lump sum transfer with effectively a strong inter-generational redistribution from the middle aged and elderly towards youth. Similarly, Van De Ven (2009), Sefton et al (2008) and subsequently Fehr and Uhde (2014) transfer unintentional bequests directly to the government budget, hence reducing the tax burden on taxpayers, i.e. young and future generations.…”

Section: Bequestsmentioning

confidence: 99%

Small assumptions (can) have a large bearing: evaluating pension system reforms with OLG models

et al. 2015

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a b s t r a c t a r t i c l e i n f oThe objective of this paper is to inquire the consequences of some simplifying assumptions typically made in the overlapping generations (OLG) models of pension systems and pension system reforms. This literature is largely driven by policy motivations and the alternative modelling choices are rarely discussed. On the other hand, the complexity of general equilibrium OLG modelling necessitates some simplifications in the model. We run a series of experiments in which the same reform in the same economy is modelled with six different sets of assumptions concerning the functional form of the utility function, time inconsistency, bequests' redistribution, labour supply decisions and internalization of the linkage between social security contributions and benefits in these decisions as well as public spending. We find that these assumptions significantly affect both the size and the sign of the macroeconomic and welfare measures of the policy effects with the order of magnitude comparable to the reform itself.

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“…We use this term to denote a combination of taxation and means testing, which drives after-tax real returns to pension saving below returns to other forms of investment, and, in some (extreme) cases, below zero. While a means-tested pension scheme allows governments to target poor pensioners and keep the public pension expenditures under control, it may also distort savings by reducing the incentive to save among those eligible to means-tested benefits as the effective return on private retirement savings is reduced relative to those who are not eligible (Fehr and Uhde, 2014;Fehr, 2015). The point is that the existence of "toxic combined taxation" may significantly reduce the incentive to save for retirement.…”

Section: Danish Op Schemes: Background and Key Design Characteristicsmentioning

confidence: 99%

Experiences with Occupational Pensions in Denmark

Jensen¹,

Pedersen²,

Foxman

2019

VJH

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Summary: This paper focuses on the development of the funded, occupational pension (OP) system in Denmark. Launched in 1987, as a grand agreement between social partners backed by the government, and as part of the collective wage bargaining process, the Danish OP system differs from the set-up in most other countries, where OP schemes typically have been introduced as part of the legislative process. The OP schemes, being a major component of the overall Danish pension system, have attracted a lot of international attention in recent years and play a key role behind the system’s success with respect to achieving satisfactory coverage, providing high replacement rates and not least, for keeping fiscal policy on a sustainable path. Finally, the paper discusses a number of future challenges, mainly related to the interaction between private and public pensions in a welfare state.

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Means-Testing Retirement Benefits in the UK: Is it Efficient?

Cited by 4 publications

References 15 publications

The Truly Vulnerable: Integrating Wealth into the Measurement of Poverty and Social Policy Effectiveness

The Truly Vulnerable: Integrating Wealth into the Measurement of Poverty and Social Policy Effectiveness

Small assumptions (can) have a large bearing: evaluating pension system reforms with OLG models

Experiences with Occupational Pensions in Denmark

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