Pension fund taxation and risk-taking: should we switch from the EET to the TEE regime?
AbstractMost countries tax retirement savings according to the EET (exempt contributions, exempt accumulations, taxable withdrawals) regime. Relevant literature recommends the use of TEE (taxable contributions, exempt accumulations, exempt withdrawals) or EET systems and emphasizes their near equivalence. We show that this near equivalence breaks down when considering the tax effects on risk-taking. This paper proves that the TEE regime is risk-taking neutral, while the EET regime does not, in general, respect this property. The argument of risk-taking neutrality thus calls for broadening the use of the TEE configuration. Copyright Springer-Verlag 2013
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Bibliographic InfoArticle provided by Springer in its journal Annals of Finance.
Volume (Year): 9 (2013)
Issue (Month): 4 (November)
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Web page: http://www.springerlink.com/link.asp?id=112370
Tax; EET regime; TEE regime; Pension funds; Defined contribution; Defined benefit; Risk-taking; C61; G11; G23; G28; H22; H39;
Find related papers by JEL classification:
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- H39 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Other
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