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To defer or not defer? State Pension in a Lifecycle Model

Author

Listed:
  • Ricky Kanabar
  • Peter Simmons

Abstract

The UK state pension (which depends only on age) includes an option to defer take up which yields either a subsequent lump sum or higher weekly pension. We analyse the joint decisions on pension deferral and intertemporal labour supply/participation in a life cycle setting. We show that deferral is purely a financial decision, but the impact of deferral on work decisions depends on preferences, wage rates, non-labour income and initial wealth. To exactly characterise this we use a quasilinear utility function, and provide calibrated simulations. We also discuss the choice between a lump sum or increased weekly pension

Suggested Citation

  • Ricky Kanabar & Peter Simmons, 2013. "To defer or not defer? State Pension in a Lifecycle Model," Discussion Papers 13/26, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:13/26
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    File URL: https://www.york.ac.uk/media/economics/documents/discussionpapers/2013/1326.pdf
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    References listed on IDEAS

    as
    1. Orazio Attanasio & Hamish Low & Virginia Sánchez-Marcos, 2008. "Explaining Changes in Female Labor Supply in a Life-Cycle Model," American Economic Review, American Economic Association, pages 1517-1552.
    2. Alan L. Gustman & Thomas L. Steinmeier, 2002. "Retirement and the Stock Market Bubble," NBER Working Papers 9404, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Retirement; Labour Supply; Ageing; UK State Pension;

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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