The Effect of Public Pension Eligibility Age on Household Saving: Evidence from a New Zealand Natural Experiment

Talosaga Talosaga and Mark Vink ()
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Mark Vink: The Treasury, https://treasury.govt.nz

No 14/21, Treasury Working Paper Series from New Zealand Treasury

Abstract: This paper examines the effect of the last increase in the eligibility age for New Zealand’s public pension, New Zealand Superannuation, on household saving rates. The age of eligibility was increased progressively from 60 to 65 years old between 1992 and 2001, with little forewarning. Drawing on Household Economic Survey data, the paper uses difference-in-difference regression analysis to compare the last cohorts to receive New Zealand Superannuation at the age of 60 years old with the first to face higher eligibility ages. The policy change is found to have increased average saving rates of affected households, particularly among middle-income and older households. The increase in saving rates is associated with higher household labour supply and income, and lower expenditure. The results suggest the policy change initially lifted the aggregate household saving rate by around 2.5 percentage points with the effect declining slightly over time.

Keywords: Household Saving; Retirement Income; New Zealand Superannuation (search for similar items in EconPapers)
JEL-codes: D14 D91 E21 H55 J26 (search for similar items in EconPapers)
Pages: 40
Date: 2014-11
New Economics Papers: this item is included in nep-age and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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