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

Kanabar, Ricky and Simmons, Peter (2016) 'To defer or not defer? UK state pension and work decisions in a lifecycle model.' Applied Economics, 48 (58). pp. 5699-5716. ISSN 0003-6846

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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.

Item Type: Article
Uncontrolled Keywords: Retirement; labour supply; ageing; UK state pension; J14; J18; J22; J26
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Institute for Social and Economic Research
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 26 May 2016 10:13
Last Modified: 15 Jan 2022 00:29
URI: http://repository.essex.ac.uk/id/eprint/16791

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