Voluntary pension savings: the effects of the finnish tax reform on savers’ behaviour

Jarkko Harju

No 2009/22, Working Papers from Institut d'Economia de Barcelona (IEB)

Abstract: Many countries tax voluntary pension savings using the so-called EET model, based on tax-deductible savings and taxable withdrawals. In Finland the tax reform of 2005 changed the tax rate schedule from progressive to proportional, while the basic structure of the EET model was retained. This paper studies empirically the savers’ behavioural changes as a result of the reform using individual level data. The econometric estimations indicate that the reform altered pension saving behaviour by reducing the labour income and age effects on saving contributions in a statistically significant way. Also, the reform reduced the number of pension savers among high income-earners.

Keywords: voluntary pension savings; tax reform; tax incentives (search for similar items in EconPapers)
JEL-codes: C24 H2 H30 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Voluntary pension savings: the effects of the Finnish tax reform on savers' behaviour (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:ieb:wpaper:doc2009-22

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