Effects of Public Policies on the Disposition of Lump-Sum Distributions: Rational and Behavioral Influences
AbstractThis paper provides new evidence on how public policies affect individuals' disposition of pre-retirement lump-sum distributions (LSDs) from pensions. The policies, enacted in the 1980s and 1990s, include changes in tax rates, penalties, withholding rules, and default options. Using data from the Health and Retirement Study, we find that each set of policies influence LSD choices independently and through interactions with the other set. The impact of defaults and withholding rules implies that behavioral considerations influence household choices. This in turn creates the possibility that a wide range of policies could be used to change saving behavior.
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Bibliographic InfoPaper provided by Center for Retirement Research in its series Working Papers, Center for Retirement Research at Boston College with number wp2006-15.
Length: 21 pages
Date of creation: Aug 2006
Date of revision: Aug 2006
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pre-retirement; lump-sum; distributions; withholding rules;
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