Long-Term Budgetary Implications of Tax-Favoured Retirement Saving Plans

70 Pages Posted: 21 Oct 2004

See all articles by Pablo Antolin

Pablo Antolin

Organisation for Economic Cooperation and Development, OECD

Alain de Serres

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Christine de la Maisonneuve

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Date Written: June 24, 2004

Abstract

This paper provides estimates of the implicit fiscal assets as well as of the evolution over time of fiscal costs and revenues related to tax-favoured retirement saving regimes in 17 OECD countries, taking into account current and future contributions, asset accumulation and withdrawals, all of which will be strongly influenced by future demographic developments. The main results show that in the case where tax incentives are assumed to lead essentially to saving diversion rather than creation, the net budgetary cost of tax-favoured schemes would remain large, despite the sharp rise in revenues collected from withdrawals as population ages. The paper shows that this cost would significantly be reduced if tax-favoured schemes succeed in promoting additional private savings. It then explores a number of policy options to maximise the amount of additional saving.

Keywords: Ageing, tax-favoured, tax-deferred, private pensions, retirement savings, fiscal revenues, public deficits

JEL Classification: E62, H20, H50, H60, J18

Suggested Citation

Antolin, Pablo and de Serres, Alain and de la Maisonneuve, Christine, Long-Term Budgetary Implications of Tax-Favoured Retirement Saving Plans (June 24, 2004). OECD Working Paper No. 393. Available at SSRN: https://ssrn.com/abstract=607163 or http://dx.doi.org/10.2139/ssrn.607163

Pablo Antolin

Organisation for Economic Cooperation and Development, OECD ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France
33-1-45.24.90.86 (Phone)
33-1-44.30.63.08 (Fax)

Alain De Serres (Contact Author)

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France

Christine De la Maisonneuve

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, MO 63108
France

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