Pension Saving and the Danish 2010 Tax Reform

Forskningsenhed: EPRU

The Danish welfare state relies heavily on citizens saving for retirement and has incentivized individual retirement savings through the tax system in various ways. An important policy question is whether individuals actually respond to these tax incentives for pension savings. A recent study by Chetty, Friedman, Leth-Petersen, Nielsen and Olsen (2014) analyzes the savings responses to the Danish 1999 tax reform, which reduced the tax subsidy for contributions to capital pension schemes, and shows this reduced capital pension contributions but without any significant effect on overall saving; 57% of the contributions were shifted towards other pension savings schemes, and the remaining part was substituted towards other types of savings.

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