Optimal Design of Means Tested Retirement Benefits
AbstractThe design of welfare benefits is a tricky business. In this respect, James Meade placed particular emphasis on the importance of avoiding excessive distortions to the price of labour. Nevertheless, Meade noted that means testing in the delivery of welfare benefits is likely to be desirable in view of the “hideously expensive” cost of universal benefits provision — he conjectured that £1 of benefits lost for every £2 of private income earned might be appropriate. In this study we take a fresh look at the role of means testing in the provision of retirement benefits in the United Kingdom. We use an articulated rational agent model of the household to explore the effects on welfare of alternative budgetary neutral pensions arrangements. We find that extensive means testing of retirement benefits is preferred, consistent with the conjectures stated by Meade. Our analysis highlights the importance of taking into account the distortions associated with alternative methods of benefits financing when considering pensions reform.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Institute of Economic and Social Research in its series NIESR Discussion Papers with number 332.
Date of creation: May 2009
Date of revision:
Contact details of provider:
Postal: 2 Dean Trench Street Smith Square London SW1P 3HE
Web page: http://www.niesr.ac.uk
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Chung Tran & Alan Woodland, 2011.
"Trade-Offs in Means Tested Pension Design,"
ANU Working Papers in Economics and Econometrics
2011-550, Australian National University, College of Business and Economics, School of Economics.
- Cagri Seda Kumru & John Piggott, 2010. "Should Public Retirement Pensions Be Means-tested?," DEGIT Conference Papers c015_049, DEGIT, Dynamics, Economic Growth, and International Trade.
- Cagri Seda Kumru & John Piggott, 2012.
"Optimal Capital Income Taxation with Means-tested Benefits,"
CAMA Working Papers
2012-21, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Cagri Seda Kumru & John Piggott, 2012. "Optimal Capital Income Taxation with Means-tested Benefits," Working Papers 201215, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
- Cagri Seda Kumru & John Piggott, 2012. "Optimal Capital Income Taxation with Means-tested Benefits," DEGIT Conference Papers c017_019, DEGIT, Dynamics, Economic Growth, and International Trade.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Communications Manager).
If references are entirely missing, you can add them using this form.