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Estimating economic and social welfare impacts of pension reform

Author

Listed:
  • van de Coevering, Clement
  • Foster, Daniel
  • Haunit, Paula
  • Kennedy, Cathal
  • Meagher, Sarah
  • Van den Berg, Jennie

Abstract

This paper examines the impact of two effects of the pension reform package that the UK Government put forward in the May White Paper Security in retirement: the likely increase in the number of older people working due to a higher State Pension age and the likely rise in saving due to more people putting away money for retirement. The overall effect of changes to State Pension age and the introduction of personal accounts on UK incomes is likely to be in the range of 0.9 – 3.1 per cent. Although these numbers are relatively small proportions of the total economy, they represent significant sums. In terms of today’s economy, they would be worth around £11 – 38 billion. This paper also applies an innovative economic analysis to examine the scale of the increase in people’s wellbeing as a result of improved consumption smoothing. It finds that if people save for retirement through personal accounts, then generally their wellbeing will be enhanced.

Suggested Citation

  • van de Coevering, Clement & Foster, Daniel & Haunit, Paula & Kennedy, Cathal & Meagher, Sarah & Van den Berg, Jennie, 2006. "Estimating economic and social welfare impacts of pension reform," MPRA Paper 1623, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:1623
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    File URL: https://mpra.ub.uni-muenchen.de/1623/1/MPRA_paper_1623.pdf
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    References listed on IDEAS

    as
    1. Daniel Kahneman, 2003. "A Psychological Perspective on Economics," American Economic Review, American Economic Association, vol. 93(2), pages 162-168, May.
    2. Kirsanova, Tatiana & Sefton, James, 2007. "A comparison of national saving rates in the UK, US and Italy," European Economic Review, Elsevier, vol. 51(8), pages 1998-2028, November.
    3. Kirsanova, Tatiana & Sefton, James, 2007. "A comparison of national saving rates in the UK, US and Italy," European Economic Review, Elsevier, vol. 51(8), pages 1998-2028, November.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Anne C. Gielen, 2009. "Working hours flexibility and older workers' labor supply," Oxford Economic Papers, Oxford University Press, vol. 61(2), pages 240-274, April.
    2. Grech, Aaron George, 2012. "Evaluating the possible impact of pension reforms on future living standards in Europe," LSE Research Online Documents on Economics 51296, London School of Economics and Political Science, LSE Library.
    3. repec:cep:sticas:/161 is not listed on IDEAS
    4. Grech, Aaron George, 2014. "Evaluating the possible impact of pension reforms on elderly poverty in Europe," MPRA Paper 57639, University Library of Munich, Germany.

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    More about this item

    Keywords

    pension reform; consumption smoothing; social welfare;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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