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Pension Schemes and Incentives: Case Studies from Australia and the United Kingdom


  • John Creedy
  • Richard Disney


The use of selective benefits, directed to those considered most in need, has a high 'poverty reduction efficiency'. But selectivity inevitably produces non-linearities in the budget constraints facing individuals, which may have incentive effects. The design of a tax and transfer scheme requires these two aspects to be carefully balanced. This article considers the issues in the context of means-testing within the Australian and UK State pension schemes. In the Australian case, the main question concerns the incentive to save, while in the UK scheme the 'earnings rule' presents a strong disincentive to work beyond pension age. Copyright 1990 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.

Suggested Citation

  • John Creedy & Richard Disney, 1990. "Pension Schemes and Incentives: Case Studies from Australia and the United Kingdom," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 23(1), pages 23-32.
  • Handle: RePEc:bla:ausecr:v:23:y:1990:i:1:p:23-32

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    References listed on IDEAS

    1. Charles L. Ballard & John B. Shoven & John Whalley, 1982. "The Welfare Cost of Distortions in the United States Tax System: A General Equilibrium Approach," NBER Working Papers 1043, National Bureau of Economic Research, Inc.
    2. repec:sae:ecolab:v:1:y:1990:i:2:p:81-107 is not listed on IDEAS
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    1. repec:bla:asiaps:v:4:y:2017:i:3:p:417-436 is not listed on IDEAS
    2. Disney, Richard & Whitehouse, Edward, 2001. "Cross-country comparisons of pensioners’ incomes," MPRA Paper 16345, University Library of Munich, Germany.

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