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Persistency of pension contributions in the UK
— evidence from aggregate and micro-data | | Author(s) | Sarah Smith |
| Corporate Author | Centre for Market and Public Organisation (CMPO), University of Bristol |
| Publisher | Centre for Market and Public Organisation, University of Bristol, Bristol, January 2006 |
| Pages | 23 pp (Working paper no 06/139) |
| Source | Centre for Market and Public Organisation, University of Bristol, Department of Economics, Mary Paley Building, 12 Priory Road, Bristol BS8 1TN. E-mail: cmpo-office@bristol.ac.uk Download available at:
http://www.bris.ac.uk/Depts/CMPO/workingpapers/wp1... |
| Keywords | Pensions ; Supplementary pensions ; Private pensions ; Preparation [retirement] ; Longitudinal surveys. |
| Annotation | Evidence is presented on the persistency of contributions to individual pensions, including an analysis of micro-data from the British Household Panel Survey (BHPS). It finds variation in persistency rates by gender, earnings and household income. Changes in income and consumption needs (for example, becoming unemployed or the arrival of a new baby) increase the probability of lapse, but household income also matters, suggesting that pensions may be less affordable for those on low incomes, even in the absence of shocks. The introduction in 2001 of stakeholder pensions, with a charge cap of 1% of final value transfers the financial penalty associated with lapsing from consumers to providers. Arguably, this will make it less likely that pensions are sold to those for whom they are less suitable. The only risk is if providers walk away from low income groups altogether. This paper is an outcome of research on the persistency of pension contributions, conducted by the Centre for Market and Public Organisation (CMPO), University of Bristol, which was jointly funded by the Leverhulme Trust and the Economic and Social Research Council (ESRC). (RH). |
| Accession Number | CPA-060727003 E |
| Classmark | JJ: JJH: JK: GA: 3J * |
Data © Centre for Policy on Ageing |
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| ...from the Ageinfo database published by Centre for Policy on Ageing. |
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