Household Saving Rates and the Design of Social Security Programmes: Evidence from a Country Panel

40 Pages Posted: 24 Oct 2005

See all articles by Richard F. Disney

Richard F. Disney

University of Nottingham; Institute for Fiscal Studies (IFS); Axia Economics

Date Written: September 2005


I argue that the offsetting effect of social security contributions on household retirement saving depends on how closely the social security programme imitates a private retirement saving plan (i.e. the "actuarial" component of the social security programme) - the closer the design of the programme to a private retirement saving plan, the higher the offset. I estimate the determinants of household saving rates in a cross-country panel, augmenting standard measures of social security programme generosity and cost by indicators that proxy the actuarial component of the programme. These indicators affect saving rates as predicted; moreover they also affect labour force participation rates of older women (but not men). The findings are consistent with the view that more actuarially-based public programmes are treated by participants as a mandatory saving programme rather than as a tax-and-transfer system, thereby raising labour force participation rates but also increasing the programme's substitutability for private retirement saving.

Keywords: social security reform, household saving

JEL Classification: E21, G23, H24

Suggested Citation

Disney, Richard F., Household Saving Rates and the Design of Social Security Programmes: Evidence from a Country Panel (September 2005). CESifo Working Paper Series No. 1541. Available at SSRN:

Richard F. Disney (Contact Author)

University of Nottingham ( email )

School of Economics
Nottingham NG7 2RD
United Kingdom
+44 115 951 5620 (Phone)
+44 115 951 4159 (Fax)

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Axia Economics ( email )

38 Concanon Road
London SW2 5TA
United Kingdom

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