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Journal Article

To defer or not defer? UK state pension and work decisions in a lifecycle model

Authors

Publication date

Dec 2016

Summary

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 lifecycle 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 characterize this, we use a quasilinear utility function and provide calibrated simulations. We also discuss the choice between a lump sum or increased weekly pension.

Published in

Applied Economics

Volume and page numbers

48 , 5699 -5716

DOI

http://dx.doi.org/10.1080/00036846.2016.1184374

ISSN

16

Subjects

Older People, Pensions, Labour Market, Income Dynamics, Household Economics, and Life Course Analysis

Links

University of Essex, Albert Sloman Library Periodicals *restricted to University of Essex registered users* - http://serlib0.essex.ac.uk/record=b1594910~S5; University of Essex Research Repository - http://repository.essex.ac.uk/16791/

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