IDEAS home Printed from https://ideas.repec.org/a/eso/journl/v48y2017i4p489-514.html
   My bibliography  Save this article

Supporting Pension Contributions Through the Tax System: Outcomes, Costs and Examining Reform

Author

Listed:
  • Micheál L. Collins

    (University College Dublin)

  • Gerard Hughes

    (Trinity College Dublin)

Abstract

Using the taxation system as a means of supporting contributions to pensions is a long standing and increasingly important policy tool. This paper examines the effectiveness of that tool using new data for Ireland in 2014. Looking at contributions from employees, employers and individuals into private pensions, we show the relatively small size of most pension contributions and highlight the challenges these imply for the adequacy of future pension income. Distributively, our results demonstrate a concentration of supports among those on the highest earnings and on the highest incomes and raise questions regarding the more efficient use of these resources.

Suggested Citation

  • Micheál L. Collins & Gerard Hughes, 2017. "Supporting Pension Contributions Through the Tax System: Outcomes, Costs and Examining Reform," The Economic and Social Review, Economic and Social Studies, vol. 48(4), pages 489-514.
    • Handle: RePEc:eso:journl:v:48:y:2017:i:4:p:489-514
    as

    Download full text from publisher

    File URL: https://www.esr.ie/article/view/824/174
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. (IFS), Institute for Fiscal Studies & Mirrlees, James (ed.), 2011. "Tax By Design: The Mirrlees Review," OUP Catalogue, Oxford University Press, number 9780199553747, Decembrie.
    2. Munnell, Alicia H., 1991. "Are Pensions Worth the Cost?," National Tax Journal, National Tax Association;National Tax Journal, vol. 44(3), pages 393-403, September.
    3. Jim Stewart, 2011. "New development: Public sector pay and pensions in Ireland and the financial crisis," Public Money & Management, Taylor & Francis Journals, vol. 31(3), pages 223-228, May.
    4. Phil Agulnik & Julian Le Grand, 1998. "Tax relief and partnership pensions," Fiscal Studies, Institute for Fiscal Studies, vol. 19(4), pages 403-428, November.
    5. José-Ignacio Antón, 2007. "Distributional Implications of Tax Relief on Voluntary Private Pensions in Spain," Fiscal Studies, Institute for Fiscal Studies, vol. 28(2), pages 171-203, June.
    6. Agulnik, Philip & Le Grand, Julian, 1998. "Tax relief and partnership pensions," LSE Research Online Documents on Economics 4652, London School of Economics and Political Science, LSE Library.
    7. Barr, Nicholas, 1992. "Economic Theory and the Welfare State: A Survey and Interpretation," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 741-803, June.
    8. Callan, Tim & Nolan, Brian & Walsh, John R., 2007. "Pension Priorities: Getting the Balance Right?," Papers BP2008/2, Economic and Social Research Institute (ESRI).
    9. Sanna Nivakoski, 2014. "Determinants of Pension Coverage and Retirement Income Replacement Rates – Evidence from TILDA," The Economic and Social Review, Economic and Social Studies, vol. 45(3), pages 299-328.
    10. Dushi, Irena & Honig, Marjorie, 2015. "How much do respondents in the health and retirement study know about their contributions to tax-deferred contribution plans? A cross-cohort comparison," Journal of Pension Economics and Finance, Cambridge University Press, vol. 14(3), pages 203-239, July.
    11. Le Grand, Julian & Agulnik, Philip, 1998. "Tax relief and partnership pensions," LSE Research Online Documents on Economics 51408, London School of Economics and Political Science, LSE Library.
    12. Barr, Nicholas, 1992. "Economic theory and the welfare state : a survey and interpretation," LSE Research Online Documents on Economics 279, London School of Economics and Political Science, LSE Library.
    13. Landerretche, Oscar M. & Martínez, Claudia, 2013. "Voluntary savings, financial behavior, and pension finance literacy: evidence from Chile," Journal of Pension Economics and Finance, Cambridge University Press, vol. 12(3), pages 251-297, July.
    14. Wiemer Salverda & Claudio Lucifora & Brian Nolan (ed.), 2000. "Policy Measures for Low-Wage Employment in Europe," Books, Edward Elgar Publishing, number 2133.
    15. Orazio Attanasio & James Banks & Matthew Wakefield, 2004. "Effectiveness of tax incentives to boost (retirement) saving: theoretical motivation and empirical evidence," IFS Working Papers W04/33, Institute for Fiscal Studies.
    16. Kwang-Yeol Yoo & Alain de Serres, 2004. "Tax Treatment of Private Pension Savings in OECD Countries and the Net Tax Cost Per Unit of Contribution to Tax-Favoured Schemes," OECD Economics Department Working Papers 406, OECD Publishing.
    17. repec:esr:chaptr:jacb200756 is not listed on IDEAS
    18. Börsch-Supan, Axel & Reil-Held, Anette & Schunk, Daniel, 2008. "Saving incentives, old-age provision and displacement effects: evidence from the recent German pension reform," Journal of Pension Economics and Finance, Cambridge University Press, vol. 7(3), pages 295-319, November.
    19. Patrick J. Drudy & Micheál L. Collins, 2011. "Ireland: from boom to austerity," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 4(3), pages 339-354.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Doorley, Karina & Callan, Tim & Regan, Mark & Walsh, John R., 2018. "The tax treatment of pension contributions in Ireland," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).
    2. Shane Whelan & Maeve Hally, 2018. "An Analysis of Taxation Supports for Private Pension Provision in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 49(3), pages 319-359.
    3. Sanna Nivakoski & Alan Barrett, 2019. "Estimating, and Interpreting, Retirement Income Replacement Rates," The Economic and Social Review, Economic and Social Studies, vol. 50(3), pages 587-609.
    4. Bercholz, Maxime & Bergin, Adele & Callan, Tim & Garcia Rodriguez, Abian & Keane, Claire, 2019. "A micro-macro economic analysis of pension auto-enrolment options," Papers WP640, Economic and Social Research Institute (ESRI).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shane Whelan & Maeve Hally, 2018. "An Analysis of Taxation Supports for Private Pension Provision in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 49(3), pages 319-359.
    2. repec:esr:chaptr:jacb200756 is not listed on IDEAS
    3. Callan, Tim & Nolan, Brian & Walsh, John R., 2007. "Pension Priorities: Getting the Balance Right?," Papers BP2008/2, Economic and Social Research Institute (ESRI).
    4. Sergio Cesaratto, 2011. "The macroeconomics of pension reform: The case of severance pay reform in Italy," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 8(1), pages 69-89.
    5. Didier Blanchet, 1996. "La référence assurantielle en matière de protection sociale : apports et limites," Économie et Statistique, Programme National Persée, vol. 291(1), pages 33-45.
    6. repec:zbw:rwirep:0170 is not listed on IDEAS
    7. Kuhn, Andreas, 2011. "In the eye of the beholder: Subjective inequality measures and individuals' assessment of market justice," European Journal of Political Economy, Elsevier, vol. 27(4), pages 625-641.
    8. Murray, Christopher J. L. & Acharya, Arnab K., 1997. "Understanding DALYs," Journal of Health Economics, Elsevier, vol. 16(6), pages 703-730, December.
    9. Adelaide Duarte & Marta Simões & João Sousa Andrade, 2014. "Estado Social, Quantis, Não-Linearidades e Desempenho Económico: Uma Avaliação Empírica," GEMF Working Papers 2014-21, GEMF, Faculty of Economics, University of Coimbra.
    10. Andersen, Torben M., 2004. "Challenges to the Scandinavian welfare model," European Journal of Political Economy, Elsevier, vol. 20(3), pages 743-754, September.
    11. Alves, C. & Guizzo, D., 2022. "Economic Theory and Policy Today: Lessons from Barbara Wootton and the Creation of the British Welfare State," Cambridge Working Papers in Economics 2246, Faculty of Economics, University of Cambridge.
    12. Chiara Carini & Ericka Costa & Maurizio Carpita & Michele Andreaus, 2012. "The Italian Social Cooperatives in 2008: A Portrait Using Descriptive and Principal Component Analysis," Euricse Working Papers 1235, Euricse (European Research Institute on Cooperative and Social Enterprises).
    13. Immacolata Marino & Filippo Pericoli & Luigi Ventura, 2011. "Tax Incentives and Household Investment in Complementary Pension Insurance: Some Recent Evidence From the Italian Experience," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 14(2), pages 247-263, September.
    14. Fong, Christina, 2001. "Social preferences, self-interest, and the demand for redistribution," Journal of Public Economics, Elsevier, vol. 82(2), pages 225-246, November.
    15. Beraldo, Sergio & Montolio, Daniel & Turati, Gilberto, 2009. "Healthy, educated and wealthy: A primer on the impact of public and private welfare expenditures on economic growth," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(6), pages 946-956, December.
    16. Rainer Kotschy & David E. Bloom, 2022. "A Comparative Perspective on Long-Term Care Systems," NBER Working Papers 29951, National Bureau of Economic Research, Inc.
    17. Härpfer, Marco & Cacace, Mirella & Rothgang, Heinz, 2009. "And fairness for all? Wie gerecht ist die Finanzierung im deutschen Gesundheitssystem? Eine Berechnung des Kakwani-Index auf Basis der EVS," Working papers of the ZeS 04/2009, University of Bremen, Centre for Social Policy Research (ZeS).
    18. Gerard Hughes, 2001. "The Cost and Distribution of Tax Expenditure on Occupational Pensions in Ireland," Papers WP139, Economic and Social Research Institute (ESRI).
    19. Giampaolo Arachi & Massimo D'Antoni, 2004. "Redistribution as Social Insurance and Capital Market Integration," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(4), pages 531-547, August.
    20. Kuhn, Andreas, 2009. "In the Eye of the Beholder: Subjective Inequality Measures and the Demand for Redistribution," IZA Discussion Papers 4360, Institute of Labor Economics (IZA).
    21. Virginie PÉROTIN, 2001. "The voluntary sector, job creation and social policy: Illusions and opportunities," International Labour Review, International Labour Organization, vol. 140(3), pages 327-362, September.
    22. Gerard Hughes, 2002. "Private Pensions and Equity in Ireland and the U.K," Papers WP142, Economic and Social Research Institute (ESRI).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eso:journl:v:48:y:2017:i:4:p:489-514. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Aedin Doris (email available below). General contact details of provider: https://www.esr.ie .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.