On 03 May the SA-TIED programme will host an online seminar on pension-related tax expenditures. The presentation will be given by Agustin Redonda and Chris Axelson under the SA-TIED project work stream on Public revenue for inclusive development.
This presentation is based on the following working paper:
Assessing pension-related tax expenditures in South Africa – Evidence from the 2016 retirement reform
By Agustin Redonda and Chris Axelson
Presented by Agustin Redonda and Chris Axelson
In 2016, the South African government introduced a comprehensive reform to simplify and harmonize the pension system in order to incentivize pension savings and increase the fairness of the retirement system. Using administrative tax micro-data, we assess the impact of the 2016 reform and find that it triggered a positive impact on the extensive margin (the number of people contributing to pension funds) and a less sharp yet positive effect on the intensive margin (the average value of contributions). The reform was not effective at mitigating the regressive impact of the retirement system because the number of individuals contributing to retirement funds increased relatively more for top earners, and it has also exacerbated the gap between low- and high-income individuals on the intensive margin side. In addition, more resources were allocated to pension-related tax expenditures, which have been proven to be highly concentrated among rich earners, both before and after the reform, hence exacerbating inequality.
Download the SA-TIED working paper here.
Join the seminar at 3:00 PM (SAST) here.
For further information email Bridgman@wider.unu.edu.