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


  • Devon Gorry
  • Kyung Min Lee
  • Sita Slavov


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

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    References listed on IDEAS

    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.
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    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

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