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To defer or not defer? State Pension in a Lifecycle Model

Ricky Kanabar and Peter Simmons

Discussion Papers from Department of Economics, University of York

Abstract: The UK state pension (which depends only on age) includes an option to defer take up which yields either a subsequent lump sum or higher weekly pension. We analyse the joint decisions on pension deferral and intertemporal labour supply/participation in a life cycle setting. We show that deferral is purely a financial decision, but the impact of deferral on work decisions depends on preferences, wage rates, non-labour income and initial wealth. To exactly characterise this we use a quasilinear utility function, and provide calibrated simulations. We also discuss the choice between a lump sum or increased weekly pension

Keywords: Retirement; Labour Supply; Ageing; UK State Pension (search for similar items in EconPapers)
JEL-codes: J14 J18 J22 J26 (search for similar items in EconPapers)
Date: 2013-09
New Economics Papers: this item is included in nep-age, nep-dem, nep-lab, nep-lma and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:13/26

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