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Does a Decrease in Pension Taxes Increase Retirement Savings? An Experimental Analysis

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  • Kay Blaufus
  • Michael Milde
  • Alexandra Spaeth

Abstract

In a series of experiments, we investigate if lowering the income tax rate on pensions increases savings. Our results show that reducing the tax rate on pensions has minimal impact on saving behavior. However, when we manipulate the current tax rate for savings deduction, subjects adjust their savings accordingly. This suggests that individuals tend to overlook the impact of income taxes on pensions. Furthermore, our findings highlight that governments can raise after-tax pensions without altering tax revenues by shifting from deferred to immediate pension tax systems.

Suggested Citation

  • Kay Blaufus & Michael Milde & Alexandra Spaeth, 2025. "Does a Decrease in Pension Taxes Increase Retirement Savings? An Experimental Analysis," Public Finance Review, , vol. 53(6), pages 786-819, November.
    • Handle: RePEc:sae:pubfin:v:53:y:2025:i:6:p:786-819
    DOI: 10.1177/10911421251335100
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    References listed on IDEAS

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