With the big APRA-regulated funds now moving to the top of the list of taxpaying entities, they are realising the importance of working with their custodians to ensure after-tax investment decisions deliver for their members.
Beijing has taken some big IT strides to be a formidable challenge to the West. What is holding it back is an increasingly centralised approach to innovation, restricting the spread of new technologies that foster productivity and progress.
Does tax deductibility increase retirement saving?
This paper presents new evidence on how employees respond to tax incentives for retirement saving. Using administrative data from a large retirement plan administrator in France, we examine the voluntary saving choices of approximately 1.4 million workers before and after the implementation of the 2019 Loi Pacte, a reform that introduced tax-deductible voluntary contributions into employer-sponsored retirement plans. One of the features of this multi-part reform was a change in the provisions for voluntary individual contributions to employer- sponsored saving plans. While such contributions were previously allowed on an after-tax basis, similar to Roth IRAs and 401(k)s in the US, the reform allowed pre-tax contributions that provided an immediate tax deduction for contributors. The reform increased contributions to retirement saving accounts, especially among higher-income, older workers and those who contributed to a voluntary saving plan on a post-tax basis before the pre-tax option became available. We also observe workers’ contributions to “medium term” saving plans that are provided by employers and can be accessed after five years; we do not find any substitution between contributions to these accounts.
