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

Ricky Kanabar, Peter Simmons

Research output: Contribution to journalArticle

2 Citations (Scopus)

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 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.
Original languageEnglish
Pages (from-to)5699-5716
Number of pages18
JournalApplied Economics
Volume48
Issue number58
Early online date21 May 2016
DOIs
Publication statusPublished - 2016

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