Mind the Gap: The Effectiveness of Incentives to boost Retirement Saving in Europe
Pension reforms all across Europe have a common theme: to reduce the generosity of the pay-as-you-go public pension pillar threatened by population aging, and to build up new pillars by private saving through occupational and individual pension plans. The extent of such retirement saving varies a great deal across Europe. This variation reflects, among other factors, the differences in public pension systems, taxation and capital market regulations. The first part of this paper looks at this variation in an attempt to learn about the effectiveness of the various incentives to boost retirement saving. While we find a strong correlation between the generosity of pay-as-you-go pensions and retirement saving, there is no straight correlation between the volume of retirement saving and the extent to which it is tax-favored. The second part of the paper uses the recent reforms in Germany as "experiments" that may shed light on which incentives might work and which might fail. We describe the introduction of the tax-favored "Riester pension plans" in 2001 and the 2004 tax reform, which changes the tax treatment of retirement savings in Germany from a conventional to a deferred taxation scheme. In spite of a deep subsidy and a generous tax treatment, "Riester pensions" have not found much attraction, while the originally heavily tax-favored whole life insurance is still wide spread. We conclude that boosting retirement saving requires more than simply tax relief.
|Date of creation:||23 Jun 2004|
|Date of revision:|
|Contact details of provider:|| Postal: Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy, Amalienstraße 33, 80799 München, Germany|
Web page: http://www.mea.mpisoc.mpg.de/
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Orazio P. Attanasio & Thomas C. DeLeire, 1994. "IRAs and Household Saving Revisited: Some New Evidence," NBER Working Papers 4900, National Bureau of Economic Research, Inc.
- Steven F. Venti & David A. Wise, 1990.
"Have IRAs Increased U. S. Saving?: Evidence from Consumer Expenditure Surveys,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 105(3), pages 661-698.
- Steven F. Venti & David A. Wise, 1987. "Have IRAs Increased U.S. Saving?: Evidence from Consumer Expenditure Surveys," NBER Working Papers 2217, National Bureau of Economic Research, Inc.
- 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.
- Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct.
- A Börsch-Supan & A Brugiavini, 2001.
"Savings: the policy debate in Europe,"
Oxford Review of Economic Policy,
Oxford University Press, vol. 17(1), pages 116-143, Spring.
- Börsch-Supan, Axel & Brugiavini, Agar, 2000. "Savings: The Policy Debate in Europe," Sonderforschungsbereich 504 Publications 01-14, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
- Agar Brugiavini, 2002. "Savings: The Policy Debate in Europe," MEA discussion paper series 02018, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- Poterba, J.M. & Venti, S.F. & Wise, D.A., 1992.
"401(k) Plans and Tax-Deferred Savings,"
92-14, Massachusetts Institute of Technology (MIT), Department of Economics.
- Axel BÃ¶rsch-Supan & Tito Boeri & Guido Tabellini, 2002. "Would you Like to Reform the Pension System?," MEA discussion paper series 02007, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
- Börsch-Supan, Axel & Lührmann, Melanie, 2000. "Prinzipien der Renten- und Pensionsbesteuerung," Discussion Papers 584, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
- Kapteyn, Arie & Alessie, Rob & Lusardi, Annamaria, 1999.
"Explaining the wealth holdings of different cohorts : productivity growth and social security,"
Serie Research Memoranda
0038, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- Kapteyn, Arie & Alessie, Rob & Lusardi, Annamaria, 2005. "Explaining the wealth holdings of different cohorts: Productivity growth and Social Security," European Economic Review, Elsevier, vol. 49(5), pages 1361-1391, July.
- Arie Kapteyn & R. Alessie & Annamaria Lusardi, 2003. "Explaining the wealth holdings of different cohorts: productivity growth and social security," Working Papers 01-03, Utrecht School of Economics.
- Arie Kapteyn & Rob Alessie & Annamaria Lusardi, 1999. "Explaining the Wealth Holdings of Different Cohorts: Productivity Growth and Social Security," Tinbergen Institute Discussion Papers 99-069/3, Tinbergen Institute.
- Palacios, Robert & Rocha, Roberto, 1998. "The Hungarian pension system in transition," Social Protection and Labor Policy and Technical Notes 20048, The World Bank.
- Andrew B. Abel & N. Gregory Mankiw & Lawrence H. Summers & Richard J. Zeckhauser, 1989.
"Assessing Dynamic Efficiency: Theory and Evidence,"
Review of Economic Studies,
Oxford University Press, vol. 56(1), pages 1-19.
- Andrew Abel & Gregory N. Mankiw & Lawrence H. Summers & Richard Zeckhauser, . "Assessing Dynamic Efficiency: Theory and Evidence," Rodney L. White Center for Financial Research Working Papers 14-88, Wharton School Rodney L. White Center for Financial Research.
- Andrew B. Abel & N. Gregory Mankiw & Lawrence H. Summers & Richard J. Zeckhauser, 1986. "Assessing Dynamic Efficiency: Theory and Evidence," NBER Working Papers 2097, National Bureau of Economic Research, Inc.
- Chiuri, Maria Concetta & Jappelli, Tullio, 2001.
"Financial Market Imperfections and Home Ownership: A Comparative Study,"
CEPR Discussion Papers
2717, C.E.P.R. Discussion Papers.
- Chiuri, Maria Concetta & Jappelli, Tullio, 2003. "Financial market imperfections and home ownership: A comparative study," European Economic Review, Elsevier, vol. 47(5), pages 857-875, October.
- Maria Concetta Chiuri & Tullio Jappelli, 2000. "Financial Market Imperfections and Home Ownership: A Comparative Study," CSEF Working Papers 44, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 01 Dec 2000.
- Feldstein, Martin & Liebman, Jeffrey B., 2002.
Handbook of Public Economics,
in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324
- Martin Feldstein, 1998. "Privatizing Social Security," NBER Books, National Bureau of Economic Research, Inc, number feld98-1, March.
- Lang, Oliver & Nohrba[ss], Karl-Heinz & Stahl, Konrad, 1997. "On income tax avoidance: the case of Germany," Journal of Public Economics, Elsevier, vol. 66(2), pages 327-347, November.
- David I. Laibson & Andrea Repetto & Jeremy Tobacman, 1998. "Self-Control and Saving for Retirement," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 91-196.
- Brugiavini, Agar & Padula, Mario, 2001. "Too much for retirement? Saving in Italy," Research in Economics, Elsevier, vol. 55(1), pages 39-60, March.
- Guiso, Luigi & Jappelli, Tullio, 2000.
"Household Portfolios in Italy,"
CEPR Discussion Papers
2549, C.E.P.R. Discussion Papers.
- Euwals, Rob, 2000. "Do Mandatory Pensions Decrease Household Savings? Evidence for the Netherlands," IZA Discussion Papers 113, Institute for the Study of Labor (IZA).
- Alessie, R.J.M. & Kapteyn, A. & Klijn, F.E., 1997.
"Mandatory pensions and personal savings in The Netherlands,"
Other publications TiSEM
dcff6ab7-1712-4830-bafe-3, Tilburg University, School of Economics and Management.
- Alessie, R.J.M. & Kapteyn, A. & Klijn, F.E., 1997. "Mandatory pensions and personal savings in The Netherlands," Discussion Paper 1997-39, Tilburg University, Center for Economic Research.
- Pablo Antolín & Alain de Serres & Christine de la Maisonneuve, 2004. "Long-Term Budgetary Implications of Tax-Favoured Retirement Plans," OECD Economics Department Working Papers 393, OECD Publishing.
- Bernard Casey & Howard Oxley & Edward R. Whitehouse & Pablo Antolín & Romain Duval & Willi Leibfritz, 2003. "Policies for an Ageing Society: Recent Measures and Areas for Further Reform," OECD Economics Department Working Papers 369, OECD Publishing.
- Tullio Jappelli & Franco Modigliani, 1998. "The Age-Saving Profile and the Life-Cycle Hypothesis," CSEF Working Papers 09, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Cigno, Alessandro & Rosati, Furio C., 1996. "Jointly determined saving and fertility behaviour: Theory, and estimates for Germany, Italy, UK and USA," European Economic Review, Elsevier, vol. 40(8), pages 1561-1589, November.
When requesting a correction, please mention this item's handle: RePEc:mea:meawpa:04052. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Henning Frankenberger)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.