Public policy and saving for retirement: Evidence from the introduction of Stakeholder Pensions in the UK

With ageing populations, OECD governments are searching for policies to increase retirement saving. In April 2001, the UK government introduced Stakeholder Pensions – a low cost retirement saving vehicle – targeted primarily on middle earners with no occupational pension. The reform also changed the structure of tax-relieved contribution ceilings, increasing their generosity for many individuals. We examine the impact of these reforms on private pension coverage using individual level micro data and a modified difference-of-differences estimator that allows for the discrete outcome variable. The results suggest that the change to the ceilings, rather than the targeting of benefits, affected private pension coverage rates