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Tax relief and partnership pensions

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  • Agulnik, Philip
  • Le Grand, Julian

Abstract

Government support of private (occupational and personal) pensions through the system of tax reliefs is large: between one quarter and one third that of direct support of state pensions through public expenditure. However, it is regressive, lacks transparency and is difficult to control. This paper argues that it should be replaced by a cost-neutral matching grant or tax-credit scheme. Such a scheme would embody the ‘partnership’ idea implicit in much government policy in this area, but would be much more progressive, more open, and more accountable than existing arrangements. The argument is illustrated by statistical comparisons of the distributional impact of the present system and three alternative versions of the tax-credit scheme. An appendix discusses the methodology for calculating the cost of pension tax reliefs over time.

Suggested Citation

  • Agulnik, Philip & Le Grand, Julian, 1998. "Tax relief and partnership pensions," LSE Research Online Documents on Economics 4652, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:4652
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    File URL: http://eprints.lse.ac.uk/4652/
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    References listed on IDEAS

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    1. Andrew Dilnot & Paul Johnson, 1993. "Tax expenditures: the case of occupational pensions," Fiscal Studies, Institute for Fiscal Studies, vol. 14(1), pages 42-56, February.
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    Cited by:

    1. Callan, Tim & Nolan, Brian & Walsh, John R., 2007. "Pension Priorities: Getting the Balance Right?," Papers BP2008/2, Economic and Social Research Institute (ESRI).
    2. Micheál L. Collins & Gerard Hughes, 2017. "Supporting Pension Contributions Through the Tax System: Outcomes, Costs and Examining Reform," The Economic and Social Review, Economic and Social Studies, vol. 48(4), pages 489-514.
    3. Shane Whelan & Maeve Hally, 2018. "An Analysis of Taxation Supports for Private Pension Provision in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 49(3), pages 319-359.
    4. repec:esr:chaptr:jacb200756 is not listed on IDEAS
    5. Sergio Cesaratto, 2011. "The macroeconomics of pension reform: The case of severance pay reform in Italy," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 8(1), pages 69-89.

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    3. Phil Agulnik & Julian Le Grand, 1998. "Tax Relief and Partnership Pensions (A version of this paper has now been published in the journal Fiscal Studies, vol.19 No.4 ,1998)," CASE Papers 005, Centre for Analysis of Social Exclusion, LSE.
    4. Whitehouse, Edward, 1999. "The tax treatment of funded pensions," Social Protection Discussion Papers and Notes 20126, The World Bank.

    More about this item

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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