Work

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

Year: 2025

Type: article

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.

Source: Public Finance Review

DOI: 10.1177/10911421251335100

Authors: Kay Blaufus, Michael Milde, Alexandra Spaeth

Institution: Leibniz University Hannover

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,650

Funder: Gottfried Wilhelm Leibniz Universität Hannover