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Targeting Risk Lovers? Incentives for Voluntary Pension Savings with Heterogeneous Risk Preferences
Stockholm University, Faculty of Social Sciences, Department of Economics.
2010 (English)Conference paper (Other academic)
Abstract [en]

Many countries need to stimulate voluntary pension-planning to meet the demands of an ageing

population. Sweden has been a front-runner in introducing tax-deferred designated pension savings

accounts along with self-directed individual public pension accounts. A particular feature is that savings

are taxed by a presumptive return. In this paper, we show that with heterogeneous risk preferences, this

tax-policy makes designated pensions unattractive for individuals with a high level of risk aversion. Using

data on self-directed choices and designated pension-savings, we also empirically confirm our result. This

paper sheds light on the importance of coherent policy-making in stimulating adequate pension planning

and also on the negative consequences of a presumptive tax-design like e.g. the Dutch “Box-III” tax


Place, publisher, year, edition, pages
Keyword [en]
Presumptive taxation, Portfolio choice, Designated Pension Savings, Dutch Box-III
URN: urn:nbn:se:su:diva-53697OAI: diva2:391142
14th International conference on Marcroeconomic analysis and international finance
Available from: 2011-01-24 Created: 2011-01-24 Last updated: 2011-05-02Bibliographically approved

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Larsson, BoSäve-Söderbergh, Jenny
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Department of Economics

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