Abstract
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 employersponsored 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.
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