Le contenu de ce rapport est fondé sur les données disponibles au 8 janvier 2024 et vise à présenter les projections relatives à l’économie et aux finances de la province pour la période allant de 2023-2024 à 2027-2028.

Consulter le document »

Le rapport intitulé Perspectives économiques et budgétaires présente les projections du BRF relatives à l’économie et aux finances de la province pour la période allant de 2023-2024 à 2027-2028. Ce rapport compare également les perspectives du BRF avec le plan gouvernemental présenté dans le document Perspectives économiques et revue financière de l’Ontario 2023 (Énoncé économique de l’automne ou ÉÉA) pour la période allant de 2023-2024 à 2025-2026. Les projections du BRF relatives aux revenus et aux dépenses s’appuient sur les politiques actuelles et annoncées du gouvernement.

Ce rapport est un plan d’investissement décennal dans les transports en commun qui trace la voie à suivre pour optimiser le transport en commun en Colombie-Britannique suite à la surpopulation.

Consulter le document »

What’s in the plan? 

1. A new province-wide express bus service to connect BC communities everywhere.
2. Make transit services more frequent and reliable throughout BC by doubling the number of BC Transit local services within five years and x3 within 10. 
3. Stop contracting with private companies; instead, expand the HandyDart service province-wide with an upgraded electric fleet.
4. Develop new regional rail connections across the South Coast and Vancouver Island along historic rail corridors.
5. Add new passenger ferry options between Vancouver, the Gulf Islands, the Sunshine Coast and Vancouver Island.
6. Accelerate TransLink’s 10-year Access for Everyone plan for Metro Vancouver.
7. Expand existing free transit programs to youth aged 13 to 18.
8. Integrate all these transit pieces into a seamless, coordinated and coherent transit experience—with one-ticket access and synchronized service and information infrastructure, for example.

Meaningful partnerships with First Nations—including free, prior, informed consent and an active role in shaping the services and the system—are also a key part of the plan, and there will be active participation from people in small towns and rural communities.

The plan shows that by repurposing some of the BC government budget for non-transit infrastructure spending, much of the plan could be funded. In addition, the plan calls on the BC government to increase its annual subsidy to all transit services and outlines the investment strategy to accomplish a cleaner and brighter future via a Connected BC.

Avec le temps, la valeur réelle des taxes spécifiques sur le carburant, qui sont fixées à l’égard du volume transigé et non du prix, s’amenuise. La seule façon de redresser la valeur réelle de ces taxes est alors de procéder à une hausse de leurs taux, un choix gouvernemental impopulaire. Or, les recettes tirées de ces taxes servent notamment au financement de l’entretien et du développement des infrastructures de transport dans une perspective utilisateur-payeur.

Consulter le document »

Dans cet article, les auteurs constatent une détérioration de la valeur réelle des taxes spécifiques sur le carburant des provinces. Un constat similaire est dressé à l’égard de la taxe d’accise fédérale sur l’essence et le diésel. Pour rappel, les recettes tirées de ces taxes servent notamment au financement de l’entretien et du développement des infrastructures de transport dans une perspective utilisateur-payeur. De plus, celles-ci favorisent une modification des choix à long terme en matière de mobilité, incitant à l’utilisation de modes de transport collectifs, actifs et moins énergivores.

Le recours à une formule de taxation advalorem (utilisée par le passé par certaines provinces) pour assurer le maintien de la valeur d’un prélèvement sur les carburants ajouterait à la volatilité du prix final de ce produit. Toutefois, une indexation annuelle des actuelles taxes volumétriques, comme dans le cas des droits d’accise sur les produits du tabac et les produits alcoolisés, est envisageable. D’ailleurs une telle forme d’indexation est utilisée par certaines juridictions et plusieurs États américains.

Le présent rapport donne un aperçu des réductions de dépenses de 500 millions de dollars en services d’experts-conseils, services professionnels et déplacements en 2023-2024 annoncées dans le budget de 2023.

Consulter le document »

En réponse à une demande du Comité permanent des opérations gouvernementales et des prévisions budgétaires, le présent rapport donne un aperçu des réductions de dépenses de 500 millions de dollars en services d’experts-conseils, services professionnels et déplacements en 2023-2024 annoncées dans le budget de 2023. Le DPB a envoyé des demandes d’information aux 68 organisations concernées pour obtenir une ventilation des économies prévues en 2023-2024, par programme et type (services professionnels ou déplacements), ainsi que des renseignements sur les réductions d’effectifs prévues et les effets sur les niveaux de service (le cas échéant). Le DPB a publié un ensemble de données complet présentant tous les renseignements reçus en réponse à ces demandes.

Le directeur parlementaire du budget (DPB) estime que de refuser les déductions d’impôt sur le revenu lorsque les responsables de location à court terme ne respectent pas les exigences provinciales ou municipales augmenterait les recettes fiscales de l’impôt sur le revenu de 170 M$ sur cinq ans.

Consulter le document »

La mesure propose de refuser les déductions d’impôt sur le revenu lorsque les responsables de location à court terme ne respectent pas les exigences provinciales ou municipales en matière de licences, de permis ou d’enregistrement. La mesure devrait entrer en vigueur à l’année d`imposition 2024. Le directeur parlementaire du budget (DPB) estime que cette mesure augmenterait les recettes fiscales de l’impôt sur le revenu de 170 millions de dollars sur cinq ans.

Les auteurs de cette note estiment que la réduction des dépenses publiques en Alberta dans les années 1990 a permis d’accroître la mobilité du revenu au sein du segment le plus pauvre de la population.

Consulter le document »

La mobilité du revenu fait référence à la capacité des individus à gravir les échelons économiques. Dans les sociétés très inégalitaires, on craint souvent qu’une personne issue de la classe économique la plus pauvre soit condamnée à y rester piégée. Cette crainte est à l’origine de nombreux plaidoyers en faveur d’une plus grande intervention de l’État dans l’économie, notamment en augmentant le financement accordé à l’éducation ou aux politiques sociales. Jusqu’à tout récemment, on n’a accordé que peu d’attention au rôle des réformes de marché pour favoriser la mobilité du revenu.

Ce rapport montre que le gouvernement fédéral pourrait parvenir à un budget équilibré en quelques années seulement en limitant légèrement ses dépenses, par exemple en ralentissant la croissance des dépenses de programme nominales de seulement 4,3 %.

Consulter le document »

Since 2015, there has been a deterioration in the federal government’s fiscal situation. Annual nominal program spending has increased an estimated $193.6 billion since 2014/15; adjusted for inflation and population growth this represents an extra $2,330 per person. Prior to the COVID pandemic, spending increased faster than population, inflation, and other relevant economic indicators. These spending increases have resulted in a string of large budgetary deficits that have contributed to an estimated $941.9 billion increase in gross federal debt from 2014/15 to 2023/24. This accumulation of debt, along with recent hikes in interest rates, has raised the cost of interest on the federal debt to one of the largest budget expense items. Moving forward, the federal government plans to slow nominal spending growth, which will keep inflation-adjusted, per-person spending relatively constant to 2026/27. Despite this, the federal government will continue running budget deficits and accumulating debt. It is also uncertain whether the federal government’s current estimates are truly reliable as the estimates do not incorporate expected spending on pharmacare or the level of defence spending to meet Canada’s NATO commitment. Moreover, the federal government’s track record of exceeding previous spending commitments calls into question the reliability of the current spending targets. Therefore, it is clear the federal government is not implementing the level of spending restraint necessary to reverse course towards a stable fiscal situation. An approach to federal finances that continues to run budget deficits and accumulate debt is economically harmful to both current and future generations of Canadians. Research shows that significant increases in debt-financed spending harm economic growth by reducing capital accumulation and labour productivity. Furthermore, accumulating debt today increases the tax burden on future generations of Canadians, as they will be responsible for paying off this debt. Despite these effects, the federal government plans to continue running deficits and accumulating debt for the foreseeable future. This need not be the case. The federal government can undertake decisive spending reform starting in 2024—similar to the reform by the Chrétien government in the 1990s—that balances the budget within a year or two. The federal government could balance the budget in 2026/27 by limiting annual growth in nominal program spending to 0.3% for two years. This would result in a 5.9% reduction in real per-person spending. Alternatively, the budget could be balanced in 2025/26 if the federal government reduces spending 4.3% for one year; the next year, 2026/27, would see a budgetary surplus. In this scenario, inflation-adjusted perperson spending would decline by 7.5%. Key trade-offs between the two approaches include the extent of the spending reform and the speed of the return to balanced budgets. Balancing the budget in one year, as opposed to two years, would result in $30.0 billion less debt accumulated by 2026/27. Though it is beyond the scope of this study to discuss how such spending reforms should be implemented, there are three areas that might be considered for reform. Business subsidies are a significant expense, yet research suggests they have little if any economic benefit, and may actually harm economic growth when governments pick winners and losers in a free market. Reviewing business subsidies might provide opportunities to find savings. Aligning government-sector wages with those in the private sector would also provide savings, as government workers in Canada currently enjoy an 8.5% wage premium (on average) relative to comparable private-sector workers. Finally, studies show that government fiscal waste can be significant. From 1988 to 2013, more than 600 government failures cost the federal government between $158.3 billion and $197.1 billion. Moreover, more than 25% of all federal COVID spending was wasteful. Addressing inefficiencies within government might also reveal savings.

L’auteur s’intéresse aux arguments en faveur d’un impôt sur la valeur foncière (land value tax) «verte» et aux paramètres qu’elle pourrait avoir.

Consulter le document »

It is urgent to implement green property taxes globally, given the climate emergency. This column has explained how to implement green discounts as part of good tax design. As well as incentivising the green transition and reducing climate risk for the financial system, the green LVT would broaden the tax base and increase revenue. It will improve equity, stabilise the economy and the financial system, improve efficiency in resource allocation and promote growth. It has the advantage of simplicity in implementation and low costs of administration. It will help reduce housing supply constraints. In country-by-country implementation of the green LVT, localism – i.e. subsidiarity and democratic accountability – and national objectives will need to be balanced to achieve public acceptability and ease the transition from the prior property tax system.

Depuis 2021, les recettes fiscales de Boston s’écartent de leur tendance historique : cet écart est sur le point de se creuser de façon spectaculaire si rien n’est fait pour réorganiser les finances de la ville de Boston.

Consulter le document »

Most economic challenges come in cycles: unemployment rises and falls; old industries decline while new ones grow. In these cases, the task of public policy is to provide temporary cushions and short-term remediation.

Something entirely different is happening in Boston. The rise of remote work, and the corresponding decline in office values, is eroding the tax system in a way that seems likely to last a long time.

The challenge—both for the city and the state—is to acknowledge this new reality and find solutions that are equally durable. That won’t be easy, but the alternative is difficult to even contemplate: a permanently diminished city.

Comment le Pays de Galles peut réformer la taxe d’habitation pour stimuler la croissance économique et réduire les inégalités ? Les trois mesures proposées par le gouvernement gallois ne permettent pas de remédier au manque d’incitations économiques de la taxe ni d’atteindre la neutralité des revenus pour les conseils sans ajustements importants des subventions.

Consulter le document »

Instead, Wales should pursue a fourth option for council tax reform that would provide better economic incentives, improve fairness by shifting council tax’s purpose from national redistribution to local redistribution, and achieve revenue neutrality for all councils. As already set out in previous Centre for Cities research to advance fiscal devolution in the three biggest cities in England, this can be done by allowing councils in Wales to set proportional tax rates for each council tax band in combination with annual revaluations.

In the first year, fiscal devolution of Welsh council tax in this manner could see 66 per cent of Wales gain an average council tax cut of almost £400, paid for by the wealthiest 33 per cent of Welsh households seeing an average increase of just under £700. Unlike other proposals, a majority of people in every borough would receive a tax cut from this proposal. As councils would be rewarded for growing their local economy – and by extension the Welsh economy – with a larger tax base, driving local prosperity and housebuilding would become key to financing local government services and delivering lower council tax bills in Wales.

Wales can do these reforms as regional inequality is relatively low and it has a rational system of local government. With the appropriate adjustments and political commitments England and Scotland could benefit too, but for Wales today there is a real opportunity to lead the rest of the United Kingdom in a progressive and pro-growth direction through fiscal devolution of council tax.

La disposition de rétrocession dans l’extension bipartisane du crédit d’impôt pour enfants aux États-Unis aurait un impact considéré comme extrêmement faible et incertain.

Consulter le document »

The House-passed bipartisan tax bill’s expansion of the Child Tax Credit takes an important step forward and would increase the credit for about 16 million children in families with low incomes in its first year. The expansion includes a so-called “lookback” provision — a modest but important provision designed to help families weather a year when their earnings temporarily decline by allowing them to use the prior year’s earnings to calculate their Child Tax Credit. This would ensure the design of the Child Tax Credit doesn’t make a financially challenging year even harder for parents and children.

Ce texte aborde l’évolution de l’impôt sur le revenu des particuliers aux États-Unis de 2021 à 2024 en mettant en lumière certains États du pays.

Consulter le document »

In the first century of state income taxation, only four states transitioned from a graduated-rate to a single-rate, or flat, individual income tax structure. But the past few years have brought significant focus on tax relief, and with that, something of a flat tax revolution. In the 15 months from July 2021 to September 2022, five states enacted laws to transform their graduated-rate income taxes into single-rate tax structures: Arizona enacted flat tax legislation in July 2021, followed by Iowa in March 2022, Mississippi and Georgia in April 2022, and Idaho in September 2022.

While no additional flat taxes were enacted in 2023, legislators in several additional states have had serious deliberations on this issue and could be on the cusp of making a similar transition over the next few years. In Kansas, a bill to convert to a single-rate tax structure passed the House and Senate but was vetoed by the governor in both 2023 and 2024. While the legislature’s veto override attempt did not pass in 2023, an override attempt is expected again this legislative session and may have a greater chance of succeeding. Similarly, in Missouri and Oklahoma—two states with nearly flat bracket structures—lawmakers have also recently discussed the possibility of moving to a single-rate system. Currently, 12 states have a flat individual income tax structure, while nine states do not levy an individual income tax on wage or salary income at all. Twenty-nine states and the District of Columbia have a graduated-rate tax structure, but one of these states (Iowa) is currently in the process of phasing in a flat tax.

Ce texte met de l’avant le compte d’épargne libre d’impôt du Canada comme un exemple qui pourrait être applicable aux États-Unis.

Consulter le document »

For most Americans, saving is a taxing experience. The most readily available option is to put money away in a savings or brokerage account and then face taxes on any interest, dividends, or capital gains received. Another option is to navigate a convoluted system of tax-advantaged accounts narrowly specified for limited uses, such as 401(k)s and IRAs for retirement, health savings accounts (HSAs) for qualified medical expenses, 529s for qualified education expenses, and the new Secure 2.0 provisions allowing employers to offer pension-linked emergency savings accounts under certain conditions.

Les recettes des États américains restent faibles au troisième trimestre de 2023.

Consulter le document »

Total state government tax revenue collections declined 1.2 percent in nominal terms and 4.3 percent in real terms in the third quarter of 2023 relative to a year earlier. The inflation-adjusted growth rates differed significantly across key revenue sources in the third quarter of 2023. Personal income tax revenues declined 2.9 percent, corporate income tax revenues declined 0.3 percent, sales tax revenues decreased 1.5 percent, and motor fuel tax collections increased 10.6 percent compared to the same period a year earlier.

Preliminary data show some rebounding in nationwide state tax revenue collections in the fourth quarter of 2023. However, most of the growth is attributable to the strong revenue collections in California, where revenues were temporarily boosted because of delayed income tax payments. Nominal state tax revenue collections increased by 6.1 percent in the fourth quarter of 2023 compared with the same period in 2022, primarily due to growth in income tax revenues. The median state, however, reported only a 0.7 percent growth. State tax revenues increased in 27 states in nominal terms, while 19 states reported year-over-year declines for the fourth quarter of 2023.

States’ fiscal path forward remains highly uncertain, particularly for states that enacted permanent tax rate cuts. State revenues are also influenced by a combination of ongoing factors, including ongoing geopolitical crises, inflation, stock market and oil price volatility, federal monetary policy, banking instability, shifts in consumer spending patterns, and natural disasters, among others.

Lorsqu’elles sont mises en œuvre dans le modèle macroéconomique pour la transition énergétique du FMI, les mesures de l’IRA liées au climat sont efficaces pour réduire les émissions de GES, tandis que leurs implications macroéconomiques sont d’une ampleur négligeable.
Consulter le document »

The IMF’s Macroeconomic Model for the Energy Transition (GMMET) is applied to assess the climate-related measures in the U.S. 2022 Inflation Reduction Act (IRA). Explicitly accouting for corporate income tax funding and assuming no permitting delays for energy-related investment, the measures are expected to cut annual greenhouse gas emissions by 710 MMT by 2030, predominantly driven by more electricity generation from renewables combined with a rising share of electric vehicles. Aggregate output and inflation are not impacted significantly, while the fiscal costs amount to about $700 billion through 2030 (another $120 billion of fixed grants and loans are not modelled). In the presence of investment delays from permitting, emission cuts would be reduced by about a third. We also show that the IRA leaves room for sizable additional emission abatement at very low costs; by targeting electricity generation from coal and methane emissions from oil and gas industries.

Les auteurs soulignent l’importance de maintenir des signaux-prix encourageant les économies d’énergie et les investissements relatifs à l’efficacité énergétique.

Consulter le document »

The energy price shock in 2022 led to government support for firms in some countries, sparking debate about the rationale and the nature of such support. The results from nationally representative firm surveys in the United States and Germany indicate that firms in these countries were generally resilient. Coping strategies adopted by firms included the pass-through of higher costs to consumers, adjustment of profit margins (United States) and investments in energy saving and efficiency (Germany). Firms in energy-intensive industries would have been significantly more affected if international energy prices were fully passed through to domestic prices in Europe. Survey responses further reveal that most firms are uncertain about the impact of recent policy announcments on green subsidies. Firms take advantage of fiscal incentives to accelerate their climate-related investment plans are often those that have previous plans to do so. These findings suggest better targeting and enhancing policy certainty will be important when facilitate the green transition among firms.

Les seuils fiscaux sont essentiels dans le système d’imposition, car ils définissent les exemptions, les taux d’imposition et les avantages, tout en présentant des défis pour les contribuables et les petites entreprises, notamment en termes de coûts élevés et de contraintes administratives. Ce rapport en fait l’analyse en proposant des principes pour améliorer la politique fiscale.

Consulter le document »

Thresholds are an integral part of the tax system. They apply to exempt some taxpayers from a charge; define when tax is levied, or a higher rate applies; or define when an allowance or other benefit is withdrawn. Thresholds can define administrative savings (those with income, gains or sales below a threshold may not need to register and comply with a tax or may be able to file in a simpler way). Yet thresholds also present challenges for taxpayers. Going over a threshold may result in very high tax costs, as well as administrative costs and burdens. The purpose of this paper is to discuss the difficulties in the main tax threshold rules as they affect individuals and small businesses and to consider a range of principles and tools that would assist in the design of future tax policy.1 Chapter 1 gives background to the issues and suggests some general principles which may be helpful, with more specific detail relating to Income Tax, savings, pensions, Corporation Tax, VAT and capital taxes being set out in Chapters 2 – 7 respectively. Chapter 8 considers thresholds relating to tax administration.

Ce texte analyse la TVA, soulignant ses qualités théoriques mais aussi ses écarts pratiques avec le modèle idéal, et conclut que malgré ses défauts, la TVA réelle est supérieure aux alternatives fiscales.

Consulter le document »

The value-added tax (VAT) is a cornerstone of the modern tax system. It has many desirable properties in theory: it does not distort firms’ production decisions, it is difficult to evade, and it generates a substantial amount of revenue. Yet, in many countries there are discrepancies between the textbook model of the VAT and its practical implementation. Where the VAT implementation diverges from its textbook model, the tax may lose its desirable properties. We draw on firm-level administrative VAT records from 11 countries at different income levels to examine the functioning of real-world VAT systems. We document four stylized facts that capture departures from the textbook VAT model which are particularly pronounced in lower-income countries. We discuss the effects on VAT performance and simulate a counterfactual retail sales tax and a turnover tax. Despite its shortcomings, we conclude that the real-world VAT is superior to the alternatives.

Selon le Bureau CPB des Pays-Bas pour l’Analyse de Politique Économique, l’économie néerlandaise reprend une croissance modérée après une stagnation, avec une amélioration du pouvoir d’achat en 2024, mais un déficit gouvernemental croissant qui dépassera la limite européenne de 3 % à partir de 2028.

Consulter le document »

After a year of stagnation, the Dutch economy is returning to a moderate growth trajectory. Dutch households will see their purchasing power recover in 2024. The government deficit is set to rise in the years ahead. Without measures, the deficit will exceed the European 3% limit from 2028. This is according to the latest projections by CPB Netherlands Bureau for Economic Policy Analysis in the Central Economic Plan 2024 (CEP) published on 22 February.

Ce document présente un aperçu du budget du printemps 2024 au Royaume-Uni.

Consulter le document »

The outlook for the economy is likely to be little changed:

• Growth has surprised to the downside as the economy has slipped into recession;
• Inflation has also been weaker than expected, driving lower interest-rate expectations;
• But in future years faster population growth will push the other way.

Lower rates and a bigger population provide around £10bn more fiscal headroom.

Expectations are for personal tax cuts:

• Fuel duty rises will be scrapped and cuts to personal taxes are expected;
• 1p off the basic rate of Income Tax costs £7bn but cutting tax rates while freezing the personal allowance is a transfer from low to high earners – those earning under £38,000 will lose out.

Britain being offered a ‘tax-raising sandwich’, not tax cuts:

• Tax rises of around £20 billion were introduced in 2023-2024, including freezing personal tax thresholds and increasing Corporation Tax;
• Highly unusually the Government has also pre-announced post-election tax rises of £17 billion;
• Past electoral experience and undeliverable spending plans mean further rises could be to come;
• Public finances forecasts based on ‘fiscal fiction’ of delivering 17 per cent cuts to real, per-capita spending in unprotected departments by 2028-2029.

L’évolution du commerce a transformé l’économie britannique, rendant les perspectives centrées sur l’industrie manufacturière obsolètes face aux changements dans l’emploi et la consommation.

Consulter le document »

Key findings:

• As international trade has grown, the exposure of the UK’s workers and consumers has changed. Although fewer workers now sit in traditionally highly-tradable, manufacturing sectors, the impact of this has been almost entirely offset by increases in the average tradability of other sectors.
• Workers are on average no less exposed to global trade than in the past but the average worker in the 90th pay decile was 18 per cent more exposed to international trade in 2019 than in 2000.
• Three-quarters of the overall increase in trade exposure of the highest-paid workers can be attributed to higher export exposure. This is the result of the expansion in the number of sectors with high export exposure (exports as a share of total supply exceeded 25 per cent) from 15 to 22 industries between 2000 and 2019.
• In 2005 a quarter of the value of goods and services consumed in the UK came from abroad. But, by 2019, this had grown to almost a third.
• Those on higher incomes tend to have a higher exposure to imports and this gap has been increasing. Between 2005 and 2019 the import share of consumption rose by 5.2 percentage points for the poorest consumers, but by 7.8 percentage points for the richest.
• Although lower-income households are less exposed to imported consumption overall, they have higher exposure to more volatile import prices. For example, food and fuels account for over a third of the poorest households’ imported consumption, compared to just under a quarter of the richest fifths’.

Le déficit d’épargne au Royaume-Uni est significatif : Pas moins d’un adulte sur trois (30 %) en âge de travailler vit dans une famille dont l’épargne est inférieure à 1 000 livres sterling, ce qui le rend financièrement vulnérable.

Consulter le document »

Families in Britain are confronted with what can be termed a ‘triple savings challenge’. This encompasses a lack of accessible ‘rainy day’ savings to cushion small cashflow shocks, inadequate precautionary saving to see people through large and unexpected income shocks, and insufficient saving to provide an adequate income in retirement. However, existing policies have treated them as separate objectives creating a tension where families must choose between saving for precautionary purposes, or saving for retirement.

Key findings:

• As many as 1-in-3 (30 per cent) of working-age adults live in families with savings below £1,000, leaving them financially vulnerable and ill-equipped to respond to small cashflow shocks.
• Larger precautionary savings balances would help people cope with bigger shocks, but the country’s savings shortfall is significant. If every working-age family in Britain had at least three months’ income in precautionary savings, aggregate savings would be £74 billion higher.
• Saving for retirement is also too low. 39 per cent of individuals aged 22 to the State Pension age (equivalent to 13 million people) were undersaving for retirement when measured against target replacement rates of at least two third of pre-retirement income.
• Policies to boost precautionary saving have largely involve fiscal incentives, such as tax breaks or bonuses based on account balances. These policies are expensive, exceeding £8 billion in 2023-24, and are inefficient as they disproportionately benefit wealthier households.
• Pension auto-enrolment has transformed pension saving. Since the introduction of auto-enrolment, the proportion of employees with a pension climbed from 47 per cent in 2012 to 79 per cent in 2021 – an extraordinary policy achievement.
• Precautionary and pension saving are in tension. Evidence indicates that when default auto-enrolment contribution rates were increased from 2 per cent to 8 per cent between 2018 and 2019, for every £1 reduction in take-home pay due to higher pension contributions, employees reduced their consumption by 34p, with the rest of the contribution funded through either lower liquid saving or higher debt.
• Other countries alleviate the tension between precautionary and pension saving by allowing early access to pension savings under a variety of conditions so that they can also act as a precautionary savings vehicle. This offers insights into how the UK’s savings policy could evolve to help boost retirement saving while also making British families more financially resilient in the short term.