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Pension Schemes and Incentives: Case Studies from Australia and the United Kingdom

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  • John Creedy
  • Richard Disney

Abstract

The use of selective benefits, directed to those considered most in need, has a high 'poverty reduction efficiency'. But selectivity inevitably produces non-linearities in the budget constraints facing individuals, which may have incentive effects. The design of a tax and transfer scheme requires these two aspects to be carefully balanced. This article considers the issues in the context of means-testing within the Australian and UK State pension schemes. In the Australian case, the main question concerns the incentive to save, while in the UK scheme the 'earnings rule' presents a strong disincentive to work beyond pension age. Copyright 1990 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.

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Bibliographic Info

Article provided by The University of Melbourne, Melbourne Institute of Applied Economic and Social Research in its journal Australian Economic Review.

Volume (Year): 23 (1990)
Issue (Month): 1 ()
Pages: 23-32

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Handle: RePEc:bla:ausecr:v:23:y:1990:i:1:p:23-32

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Cited by:
  1. Disney, Richard & Whitehouse, Edward, 2001. "Cross-country comparisons of pensioners’ incomes," MPRA Paper 16345, University Library of Munich, Germany.

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