IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/27508.html
   My bibliography  Save this paper

Does the Actuarial Adjustment for Pension Delay Affect Retirement and Claiming Decisions?

Author

Listed:
  • Devon Gorry
  • Kyung Min Lee
  • Sita Slavov

Abstract

We investigate the impact of more generous terms for delaying state pensions on claiming and labor supply in the United Kingdom using a 2005 policy change. First, we find that the more generous delay terms reduced the fraction of males receiving pensions at the earliest eligibility age and shortly after. While there are also post-policy changes in women’s claiming behavior, further investigation reveals that these changes do not coincide with the start of the policy and are therefore less likely to be causal effects. Second, we find post-policy increases in labor supply around the earliest pension eligibility age, followed by post-policy decreases in labor supply at older ages. While these labor supply changes cannot easily be separated from longer-term trends, they are consistent with some individuals choosing to work longer to finance pension delay, followed by some individuals retiring earlier due to the income effect from more generous pension benefits. Finally, we find that among individuals who delayed pensions for up to 5 years, about 3 percent of individuals took their gains from delay as lump sums, an option made available under the policy changes.

Suggested Citation

  • Devon Gorry & Kyung Min Lee & Sita Slavov, 2020. "Does the Actuarial Adjustment for Pension Delay Affect Retirement and Claiming Decisions?," NBER Working Papers 27508, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:27508
    Note: AG PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w27508.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Raimond Maurer & Olivia S. Mitchell & Ralph Rogalla & Tatjana Schimetschek, 2018. "WILL THEY TAKE THE MONEY AND WORK? PEOPLE'S WILLINGNESS TO DELAY CLAIMING SOCIAL SECURITY BENEFITS FOR a LUMP SUM," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 85(4), pages 877-909, December.
    2. Richard Disney & Sarah Smith, 2002. "The Labour Supply Effect of the Abolition of the Earnings Rule for Older Workers in the United Kingdom," Economic Journal, Royal Economic Society, vol. 112(478), pages 136-152, March.
    3. Cribb, Jonathan & Emmerson, Carl & Tetlow, Gemma, 2016. "Signals matter? Large retirement responses to limited financial incentives," Labour Economics, Elsevier, vol. 42(C), pages 203-212.
    4. Jonathan Moizer & Sue Farrar & Mark Hyde, 2018. "UK state pension deferral incentives and sustainability," Applied Economics, Taylor & Francis Journals, vol. 50(21), pages 2356-2368, May.
    5. Shoven, John B. & Slavov, Sita Nataraj, 2014. "Does it pay to delay social security?," Journal of Pension Economics and Finance, Cambridge University Press, vol. 13(2), pages 121-144, April.
    6. Ricky Kanabar & Peter Simmons, 2016. "To defer or not defer? UK state pension and work decisions in a lifecycle model," Applied Economics, Taylor & Francis Journals, vol. 48(58), pages 5699-5716, December.
    Full references (including those not matched with items on IDEAS)

    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. James Banks & Carl Emmerson & Gemma Tetlow, 2018. "Long-run Trends in the Economic Activity of Older People in the UK," NBER Working Papers 24606, National Bureau of Economic Research, Inc.
    2. Jason S. Scott & John B. Shoven & Sita N. Slavov & John G. Watson, 2020. "Can Low Retirement Savings Be Rationalized?," NBER Working Papers 26784, National Bureau of Economic Research, Inc.
    3. James Banks & Carl Emmerson & Gemma Tetlow, 2018. "Long-Run Trends in the Economic Activity of Older People in the United Kingdom," NBER Chapters, in: Social Security Programs and Retirement around the World: Working Longer, pages 267-297, National Bureau of Economic Research, Inc.
    4. Courtney C. Coile, 2015. "Economic Determinants Of Workers’ Retirement Decisions," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 830-853, September.
    5. Jamie Hentall MacCuish, 2019. "Rational Inattention and Retirement Puzzles," Papers 1904.06520, arXiv.org.
    6. Raimond Maurer & Olivia S. Mitchell & Ralph Rogalla & Tatjana Schimetschek, 2017. "Optimal Social Security Claiming Behavior under Lump Sum Incentives: Theory and Evidence," NBER Working Papers 23073, National Bureau of Economic Research, Inc.
    7. Goda, Gopi Shah & Ramnath, Shanthi & Shoven, John B. & Slavov, Sita Nataraj, 2018. "The financial feasibility of delaying Social Security: evidence from administrative tax data," Journal of Pension Economics and Finance, Cambridge University Press, vol. 17(4), pages 419-436, October.
    8. Matthew S. Rutledge & John E. Lindner, 2016. "Do Late-Career Wages Boost Social Security More For Women Than Men?," Working Papers, Center for Retirement Research at Boston College wp2016-13, Center for Retirement Research.
    9. Kadir Atalay & Garry F. Barrett & Peter Siminski, 2019. "Pension incentives and the joint retirement of couples: evidence from two natural experiments," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(3), pages 735-767, July.
    10. Jonathan Gruber & Ohto Kanninen & Terhi Ravaska, 2020. "Relabeling, Retirement and Regret," NBER Working Papers 27534, National Bureau of Economic Research, Inc.
    11. Malkova, Olga, 2019. "Did Soviet Elderly Employment Respond to Financial Incentives? Evidence from Pension Reforms," IZA Discussion Papers 12790, Institute of Labor Economics (IZA).
    12. Haan, Peter & Prowse, Victoria, 2014. "Longevity, life-cycle behavior and pension reform," Journal of Econometrics, Elsevier, vol. 178(P3), pages 582-601.
    13. Dolls, Mathias & Krolage, Carla, 2019. "The Effects of Early Retirement Incentives on Retirement Decisions," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203486, Verein für Socialpolitik / German Economic Association.
    14. Arthur Seibold, 2019. "Reference Points for Retirement Behavior: Evidence from German Pension Discontinuities," CESifo Working Paper Series 7799, CESifo.
    15. Heywood, John S. & Siebert, W. Stanley, 2009. "Understanding the Labour Market for Older Workers: A Survey," IZA Discussion Papers 4033, Institute of Labor Economics (IZA).
    16. Pierre-Carl Michaud & Arthur vanSoest, 2006. "How Did the Elimination of the Earnings Test Above the Normal Retirement Age Affect Retirement Expectations?," Working Papers wp135, University of Michigan, Michigan Retirement Research Center.
    17. Disney, Richard & Emmerson, Carl & Wakefield, Matthew, 2006. "Ill health and retirement in Britain: A panel data-based analysis," Journal of Health Economics, Elsevier, vol. 25(4), pages 621-649, July.
    18. Hugo Benítez Silva & Richard Disney & Sergi Jiménez-Martín, 2009. "Disability, capacity for work and the business cycle: An international perspective," Economics Working Papers 1171, Department of Economics and Business, Universitat Pompeu Fabra.
    19. Tran, Chung & Woodland, Alan, 2014. "Trade-offs in means tested pension design," Journal of Economic Dynamics and Control, Elsevier, vol. 47(C), pages 72-93.
    20. Marie Hyland & Simeon Djankov & Pinelopi Koujianou Goldberg, 2020. "Gendered Laws and Women in the Workforce," American Economic Review: Insights, American Economic Association, vol. 2(4), pages 475-490, December.

    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:nbr:nberwo:27508. 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: (). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.