Hostname: page-component-586b7cd67f-dsjbd Total loading time: 0 Render date: 2024-11-28T06:03:17.172Z Has data issue: false hasContentIssue false
  • English
  • Français

Supplementary private pensions and saving: evidence from Spain*

Published online by Cambridge University Press:  19 February 2014

JOSÉ-IGNACIO ANTÓN ,
RAFAEL MUÑOZ DE BUSTILLO  and
ENRIQUE FERNÁNDEZ-MACÍAS
JOSÉ-IGNACIO ANTÓN*
Affiliation:
Department of Applied Economics, University of Salamanca, Salamanca, Spain
RAFAEL MUÑOZ DE BUSTILLO*
Affiliation:
Department of Applied Economics, University of Salamanca, Salamanca, Spain
ENRIQUE FERNÁNDEZ-MACÍAS*
Affiliation:
Department of Sociology and Communication, University of Salamanca, Salamanca, Spain
*
(e-mail: [email protected])
(e-mail: [email protected])
(e-mail: [email protected])
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper analyzes the effect of private supplementary pensions (and the tax reliefs that aim to stimulate such plans) on national saving in Spain. It tries to test the alleged positive effects of private pension plans on savings. Using a longitudinal dataset and fixed-effects methods, we find that tax-favored contributions to a pension fund are not associated with a lower consumption level, which implies that this policy does not increase national saving. The empirical results on the impact of contributions on private household wealth are less clear.

Keywords

D91H31I38Tax reliefsavingpension fundsSpain
Type
Articles
Information
Journal of Pension Economics & Finance , Volume 13 , Issue 4 , October 2014 , pp. 367 - 388
Copyright
Copyright © Cambridge University Press 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

We thank anonymous referees and Thomas Prosser for comments that helped to substantially improve the article.

References

Angrist, J. D. and Krueger, A. N. (1999) Empirical strategies in labor economics. In Ashenfelter, O. and Card, D. (eds), Handbook of Labor Economics, Volume 3. North Holland, Amsterdam: Elsevier, chapter 23, pp. 1277–1366.Google Scholar
Angrist, J. D. and Pischke, J. S. (2009) Mostly Harmless Econometrics: An Empiricist's Companion. Princeton: Princeton University Press.Google Scholar
Antón, J. I. (2007) Distributional implications of tax relief on voluntary private pensions in Spain. Fiscal Studies, 28: 171–203.Google Scholar
Arrau, P. and Schmidt-Hebbel, K. (1993) Macroeconomic and intergenerational welfare effects of a transition from pay-as-you-go to fully funded pensions. Policy Research Department, Macroeconomics and Growth Division, The World Bank.Google Scholar
Atkinson, A. B. and Stiglitz, J. E. (1980) Lectures on Public Economics. London: McGraw-Hill.Google Scholar
Attanasio, O. P. and DeLeire, T. (2002) The effect of individual retirement accounts on household consumption and national saving. Economic Journal, 112: 504–538.Google Scholar
Attanasio, O. P. and Wakefield, M. (2010) The effects on consumption and saving of taxing asset returns? In Mirrlees, J., Adam, S., Besley, T., Blundell, R., Bond, S., Chote, R., Gammie, M., Johnson, P., Myles, G. and Poterba, J. (eds), Dimensions of Tax Design: the Mirrlees Review. Oxford: Oxford University Press, pp. 675–736.Google Scholar
Attanasio, O. P. and Weber, G. (2010) Consumption and saving: models of intertemporal allocation and their implications for public policy. Journal of Economic Literature, 48: 693–751.Google Scholar
Attanasio, O. P., Banks, J. and Wakefield, M. (2004) Effectiveness of tax incentives to boost (retirement) saving: theoretical motivation and empirical evidence. OECD Economic Studies, 39: 145–172.Google Scholar
Auerbach, A. J. and Kotlikoff, L. J. (1987) Dynamic Fiscal Policy. New York: Cambridge University Press.Google Scholar
Ayuso, J., Jimeno, J. F. and Villanueva, E. (2007) The effects of the introduction of tax incentives on retirement savings. Working Paper No. 724, Bank of Spain.Google Scholar
Barceló, C. (2006) Imputation of the 2002 wave of the Spanish Survey of Household Finances (EEF). Occassional Paper No. 603, Bank of Spain.Google Scholar
Barr, N. (1992) Economic Theory and the Welfare State: survey and interpretation. Journal of Economic Literature, 30: 741–803.Google Scholar
Barr, N. and Diamond, P. (2006) The economics of pensions. Oxford Review of Economic Policy, 22(1): 15–39.Google Scholar
Bernheim, D. B. (2002) Taxation and saving. In Auerbach, A. J. and Feldstein, M. (eds), Handbook of Public Economics, Volume 3. North Holland, Amsterdam: Elsevier, pp. 1173–1249.Google Scholar
Börsch-Supan, A. (2004) Mind the gap: the effectiveness of incentives to boost retirement saving in Europe. OECD Economic Studies, 39: 111–144.Google Scholar
Börsch-Supan, A., Reil-Held, A. and Schunk, D. (2007) The savings behaviour of German households: first experiences with state promoted private pensions. Working Paper No. 136, Mannheim Research Institute for the Economics of Ageing.Google Scholar
Bosworth, B. and Burtless, G. (2004) Pension Reform and Saving. National Tax Journal, 57: 703–727.CrossRefGoogle Scholar
Bound, J., Jaeger, D. A. and Baker, R. M. (1995) Problems with instrumental variables estimation when the correlation between the instruments and the endogenous explanatory variable is weak. Journal of the American Statistical Association, 90: 443–450.Google Scholar
Bover, O. (2004) Encuesta Financiera de las Familias (EFF): descripción, métodos y resultados preliminares. Boletín Económico, 62–82.Google Scholar
Bover, O. (2008 a). The Spanish Survey of Household Finances (EFF): description and methods of the 2005 wave. Occasional Paper No. 803, Bank of Spain.Google Scholar
Bover, O. (2008 b). Dinámica de la renta y la riqueza de las familias españolas: resultados del panel de la Encuesta Financiera de las Familias (EFF) 2002–2005. Occasional Paper No. 810, Bank of Spain.Google Scholar
Burman, L. E., Gale, W. L., Hall, M. and Orszag, P. (2004) Distributional effects of defined contribution plans and individual retirement arrangements. National Tax Journal, 57: 671–701.Google Scholar
Corneo, G., Keese, M. and Schröder, C. (2010) The effect of saving subsidies on household saving: evidence from Germany. Ruhr Economic Papers No. 170, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.Google Scholar
Corsetti, G. and Schmidt-Hebbel, K. (1997) Pension reform and growth. In Valdés-Prieto, S. (ed.), The Economics of Pensions. Principles, Policies and International Experience. Cambridge: Cambridge University Press, pp. 127–159.Google Scholar
Diamond, P. A. and Hausman, J. A. (1984) Individual retirement and savings behavior. Journal of Public Economics, 23: 81–114.Google Scholar
Dirección General de Seguros y Fondos de Pensiones (2009) Planes y Fondos de Pensiones. Informe Estadístico 2008. Available online at http://www.dgsfp.meh.es/Docs/Internet/Memoria_2008_Fondos/PLANES_y_FONDOS_DE_PENSIONES2008.pdf [last accessed on 5th January 2011].Google Scholar
Domínguez-Barrero, F. and López-Laborda, J. (2007) Why do people invest in personal pension plans. Applied Economics, 39: 1115–1126.CrossRefGoogle Scholar
Duflo, E., Gale, W., Liebman, J., Orszag, P. and Saez, E. (2006) Saving incentives for low- and middle-income families: evidence from a field experiment with H&R Block. Quarterly Journal of Economics, 121: 1311–1346.Google Scholar
Duflo, E., Gale, W., Liebman, J., Orszag, P. and Saez, E. (2007) Savings incentives for low- and moderate-income families in the United States: why is the saver's credit not more effective? Journal of the European Economic Association, 5: 647–661.Google Scholar
Duflo, E., Glennerster, R. and Kremer, M. (2008) Using randomization in Development Economics: A toolkit. In Schulz, T. P. and Strauss, J. A. (eds), Handbook of Development Economics, Volume 4, Ch. 61. North Holland, Amsterdam: Elsevier, pp. 3895–3962.Google Scholar
Engen, E. M., Gale, W. G. and Scholz, J. K. (1994) Do saving incentives work? Brookings Papers on Economic Activity, 1: 85–180.Google Scholar
Feldstein, M. (1974) Social Security, induced retirement and aggregate capital accumulation. Journal of Political Economy, 82: 905–925.Google Scholar
Feldstein, M. (1988) The effect of social policies when incomes are uncertain: a contradiction to Ricardian Equivalence. American Economic Review, 78: 14–23.Google Scholar
Gale, W. G. (1998) The effects of pensions on household wealth: a reevaluation of theory and evidence. Journal of Political Economy, 106: 706–723.Google Scholar
Gale, W. G. and Scholz, J. K. (1994) IRAs and household saving. American Economic Review, 84: 1233–1260.Google Scholar
Guariglia, A. and Markose, S. (2000) Voluntary contributions to personal pension plans: evidence from the British Household Panel Survey. Fiscal Studies, 21: 469–488.Google Scholar
Hughes, G. and Sinfield, A. (2004) Financing pensions by stealth: the Anglo-American model and the cost and distribution of tax benefits for private pensions. In Hughes, G. and Stewart, J. (eds), Reforming Pensions in Europe: Evolution of Pension Financing and Sources of Retirement Income. Cheltenham: Edward Elgar, pp. 163–192.Google Scholar
Independent Evaluation Group (2006) Pension Reform and the Development of Pension Systems. An Evaluation of World Bank Assistance. Washington, DC: The World Bank.Google Scholar
Joines, D. H. and Manegold, J. G. (1995) IRA and saving: evidence from a panel of taxpayers. Mimeo, University of Southern California.Google Scholar
Khandker, S. R., Koolwal, G. B. and Samad, H. A. (2010) Handbook on Impact Evaluation: Quantitative Methods and Practices. Washington, DC: The World Bank.Google Scholar
Kotlikoff, L. J. (1979) Testing the theory of Social Security and life cycle accumulation. American Economic Review, 69: 396–410.Google Scholar
Kotlikoff, L. J. (1996) Privation of Social Security: how it works and why it matters. In Poterba, J. M. (ed.), Tax Policy and the Economy, Volume 10. Massachusetts: National Bureau of Economic Research, pp. 1–32.Google Scholar
Kotlikoff, L. J., Smeeters, K. and Walliser, J. (1999) Privatizing Social Security in the United States-comparing the options. Review of Economic Dynamics, 2: 532–574.Google Scholar
López, M. A. (2000) Pensiones privadas y ahorro agregado. Hacienda Pública Española, Extraordinary No. 2000, pp. 279–290.Google Scholar
López-Murphy, P. and Musalem, A. R. (2000) Pension funds and national saving. World Bank Working Paper No. 3410.Google Scholar
López-Murphy, P. and Musalem, A. R. (2004) Pension funds and national saving. World Bank Policy Research Working Paper No. 3410. Available at SSRN: http://ssrn.com/abstract=625287Google Scholar
Lusardi, A. (2004) Saving and effectiveness of financial education. In Mitchell, O. S. and Utkus, S. P. (eds), Pension Design and Structure: New Lessons from Behavioral Finance. New York: Oxford University Press, pp. 157–184.Google Scholar
Lusardi, A., Keller, P. A. and Keller, A. M. (2008) New ways to make people save: a social marketing approach. In Lusardi, A. (ed.), Overcoming the Saving Slump. How to Increase the Effectiveness of Financial Education and Saving Programs. Chicago: University of Chicago Press, pp. 209–236.Google Scholar
McKenzie, D., Gibson, J. and Stillman, S. (2010) How important is selection? experimental vs. non-experimental measures of the income gains from migration. Journal of the European Economic Association, 8: 913–945.Google Scholar
Mesa-Lago, C. (2004) An appraisal of a quarter-century structural pension reforms in Latin America. CEPAL Review, 84: 57–81.Google Scholar
OECD (2009) Pensions at a Glance 2009. Retirement-income systems in OECD Countries. Paris: OECD.Google Scholar
Poterba, J. M., Venti, S. S. and Wise, D. A. (1995) Do 401(k) contributions crowd out other private saving? Journal of Public Economics, 58: 1–32.Google Scholar
Rossi, M. C. (2009) Examining the interaction between saving and contributions to personal pension plans: evidence from the BHPS. Oxford Bulletin of Economics and Statistics, 71: 253–271.Google Scholar
Staiger, D. and Stock, J. H. (1997) Instrumental variables regression with weak instruments. Econometrica, 65: 557–586.Google Scholar
Valdés-Prieto, S. (1997) Financing a pension reform toward private funded pensions. In Valdés-Prieto, S. (ed.), The Economics of Pensions. Principles, Policies and International Experience. Cambridge: Cambridge University Press, pp. 109–224.Google Scholar
Venti, S. F. and Wise, D. A. (1986) Tax-deferred accounts, constrained choice, and estimation of individual saving. Review of Economic Studies, 53: 579–601.Google Scholar
Venti, S. F. and Wise, D. A. (1990) Have IRAs increased U.S. savings? Evidence from Consumer Expenditure Surveys. Quarterly Journal of Economics, 105: 661–698.Google Scholar
Wooldridge, J. M. (2010) Econometric Analysis of Cross Section and Panel Data, 2nd edition. Massachusetts: MIT University Press.Google Scholar
Yoo, K. Y. and De Serres, A. (2004) Tax treatment of pension contribution savings in OECD Countries and the net cost per unit of contribution to tax-favoured schemes. OECD Economic Studies, 39: 73–110.Google Scholar