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Long-Term Budgetary Implications of Tax-Favoured Retirement Plans

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  • Pablo Antolín
  • Alain de Serres
  • Christine de la Maisonneuve

Abstract

This paper provides estimates of the implicit fiscal assets as well as of the evolution over time of fiscal costs and revenues related to tax-favoured retirement saving regimes in 17 OECD countries, taking into account current and future contributions, asset accumulation and withdrawals, all of which will be strongly influenced by future demographic developments. The main results show that in the case where tax incentives are assumed to lead essentially to saving diversion rather than creation, the net budgetary cost of tax-favoured schemes would remain large, despite the sharp rise in revenues collected from withdrawals as population ages. The paper shows that this cost would significantly be reduced if tax-favoured schemes succeed in promoting additional private savings. It then explores a number of policy options to maximize the amount of additional saving ... Lmplications budgétaires à long terme des plans d'épargne retraite à traitement fiscal favorable Cette étude présente, pour 17 pays de l’OCDE, les résultats d’estimation des avoirs nets budgétaires ainsi que de l’évolution sur le temps des coûts et revenus fiscaux liés aux plans privés d’épargne retraite à traitement fiscal favorable. Les estimations prennent en compte les contributions, l’accumulation d’actifs et les prestations présentes et futures qui seront influencées par les changements démographiques à venir. Les principaux résultats suggèrent que dans l’hypothèse où les incitatifs fiscaux ont peu d’effet sur la creation nette d’épargne et conduisent plutôt à une réallocation de l’épargne existante, le coût budgétaire net des plans d’épargne retraite à traitement fiscal favorable demeurera élevé et ce, en dépit de la forte croissance des recettes fiscales anticipée, liée à l’augmentation importante du nombre de retraités par rapport au nombre de contributeurs. L’étude montre en outre que le coût budgétaire est sensiblement réduit dans l’hypothèse où ces plans ...

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 393.

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Date of creation: 24 Jun 2004
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Handle: RePEc:oec:ecoaaa:393-en

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Keywords: tax-favoured; private pensions; tax-deferred; retirement savings; ageing; fiscal revenues; public deficits; pensions privées; vieillissement; fiscalité favorable; épargne pour la retraite; déficit public;

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Cited by:
  1. Łukasz Rawdanowicz & Eckhard Wurzel & Ane Kathrine Christensen, 2013. "The Equity Implications of Fiscal Consolidation," OECD Economics Department Working Papers 1013, OECD Publishing.
  2. Douglas Sutherland & Peter Hoeller & Rossana Merola, 2012. "Fiscal Consolidation: Part 1. How Much is Needed and How to Reduce Debt to a Prudent Level?," OECD Economics Department Working Papers 932, OECD Publishing.
  3. Sutherland, Douglas, 2012. "Fiscal Consolidation Needs and Implications for Growth," MPRA Paper 38745, University Library of Munich, Germany.
  4. Pearson, Mark & Martin, John P., 2005. "Should We Extend the Role of Private Social Expenditure?," IZA Discussion Papers 1544, Institute for the Study of Labor (IZA).
  5. Douglas Sutherland & Peter Hoeller & Rossana Merola, 2012. "Fiscal Consolidation: How Much, How Fast and by What Means?," OECD Economic Policy Papers 1, OECD Publishing.
  6. Corneo, Giacomo & Keese, Matthias & Schröder, Carsten, 2008. "Can governments boost voluntary retirement savings via tax incentives and subsidies? A German case study for low-income households," Economics Working Papers 2008,18, Christian-Albrechts-University of Kiel, Department of Economics.
  7. Giacomo Corneo & Matthias Keese & Carsten Schröder, 2010. "The Eff ect of Saving Subsidies on Household Saving – Evidence from Germanys," Ruhr Economic Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen 0170, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  8. Robert P. Hagemann, 2012. "Fiscal Consolidation: Part 6. What Are the Best Policy Instruments for Fiscal Consolidation?," OECD Economics Department Working Papers 937, OECD Publishing.
  9. Börsch-Supan, Axel, 2004. "MIND THE GAP: The Effectiveness of Incentives to Boost Retirement Saving in Europe," Sonderforschungsbereich 504 Publications, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim 07-27, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  10. Axel Börsch-Supan, 2004. "Mind the Gap: The Effectiveness of Incentives to boost Retirement Saving in Europe," MEA discussion paper series, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy 04052, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  11. Frédéric Gonand, 2006. "Réforme des retraites, marchés financiers et investissement socialement responsable : les affinités électives," Revue d'Économie Financière, Programme National Persée, Programme National Persée, vol. 85(4), pages 285-294.
  12. Caminada, Koen & Goudswaard, Kees, 2005. "Budgetary costs of tax facilities for pension savings: an empirical analysis," MPRA Paper 20735, University Library of Munich, Germany.
  13. Koen Caminada & Kees Goudswaard, 2008. "Revenue Effects of Tax Facilities for Pension Savings," Atlantic Economic Journal, International Atlantic Economic Society, International Atlantic Economic Society, vol. 36(2), pages 233-246, June.
  14. Direr, A., 2010. "The taxation of life annuities under adverse selection," Journal of Public Economics, Elsevier, Elsevier, vol. 94(1-2), pages 50-58, February.

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