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Assessing pension-related tax expenditures in South Africa: Evidence from the 2016 retirement reform

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  • Agustin Redonda
  • Christopher Axelson

Abstract

In 2016, the South African government introduced a comprehensive reform to simplify and harmonize the pension system in order to incentivize pension savings and increase the fairness of the retirement system. Using administrative tax micro-data, we assess the impact of the 2016 reform and find that it triggered a positive impact on the extensive margin (the number of people contributing to pension funds) and a less sharp yet positive effect on the intensive margin (the average value of contributions).

Suggested Citation

  • Agustin Redonda & Christopher Axelson, 2021. "Assessing pension-related tax expenditures in South Africa: Evidence from the 2016 retirement reform," WIDER Working Paper Series wp-2021-54, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2021-54
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    File URL: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp2021-54-pension-related-tax-expenditures-South-Africa.pdf
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    References listed on IDEAS

    as
    1. Senia Nhamo & Edinah Mudimu, 2020. "Shifting from deductions to credits: Unpacking the distributional effects of medical expenditure considerations in South Africa," WIDER Working Paper Series wp-2020-30, World Institute for Development Economic Research (UNU-WIDER).
    2. Martin Caruso Bloeck & Sebastian Galiani & Federico Weinschelbaum, 2019. "Poverty alleviation strategies under informality: evidence for Latin America," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-40, December.
    3. Raj Chetty & John N. Friedman & Søren Leth-Petersen & Torben Heien Nielsen & Tore Olsen, 2014. "Active vs. Passive Decisions and Crowd-Out in Retirement Savings Accounts: Evidence from Denmark," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1141-1219.
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    Cited by:

    1. Ada Jansen & Winile Ngobeni & Wynnona Steyn, 2023. "A reform option for pension fund contribution as tax expenditure in South Africa: A microsimulation model approach using tax administrative data," WIDER Working Paper Series wp-2023-139, World Institute for Development Economic Research (UNU-WIDER).
    2. Owen Nyang'oro & Githinji Njenga, 2022. "Pension funds in sub-Saharan Africa," WIDER Working Paper Series wp-2022-95, World Institute for Development Economic Research (UNU-WIDER).
    3. Chandré Jacobs & Amina Ebrahim & Murray Leibbrandt & Jukka Pirttilä & Marlies Piek, 2024. "Income inequality in South Africa: Evidence from individual-level administrative tax data," WIDER Working Paper Series wp-2024-55, World Institute for Development Economic Research (UNU-WIDER).

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    More about this item

    Keywords

    Pensions; Tax incentive; Inequality; Tax expenditures; retirement;
    All these keywords.

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