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Laurence O'Brien

@laurenceobrien.bsky.social
134 followers 84 following 42 posts

Economist at IFS | PhD student in Economics at UCL

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Reposted by Laurence O'Brien
The Institute for Fiscal Studies @theifs.bsky.social · 26/05/2026
"This reform reduces one arbitrary distinction in the tax system while increasing another. A simpler system of pensions taxation is possible." 📰 Read @matthewoulton.bsky.social & @laurenceobrien.bsky.social's article in FT Adviser on the latest pension tax reform: www.ftadviser.com/content/387f...
ftadviser.com
Pensions tax reform is a step in the wrong direction
In last November’s Budget the chancellor announced a significant change to the taxation of pensions.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
Check out the report here for even more wonky details about valuing private pensions! ifs.org.uk/publications...
ifs.org.uk
How is wealth distributed across British households? Reassessing the valuation of pensions | Institute for Fiscal Studies
How is wealth distributed and how has this changed over time? We use a consistent methodology for valuing pension wealth to answer these questions.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
Interest rates have risen since 2022. We would therefore expect our approach to produce more similar numbers to the ONS in the next data release (covering 2022–24). However, they could diverge again going forwards if market interest rates change once more.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
Another effect is to shrink gaps in wealth by age. This is because discounting matters more for people who are further from retirement. People aged 20–39 held 18% of all wealth in 2020–22 under our measure compared with only 11% under official statistics.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
One effect of this is to widen gaps in wealth by education. This is because more educated people are more likely to hold DB pensions. Wealth for people with a degree increases by 50% in 2020–22 when we apply our changes. For people with no qualifications, the increase was <20%.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
In the latest data, covering 2020–22, discounting by market interest rates makes pensions much more important. 54% of total household wealth was in pensions under our measure, compared to 38% in official stats. This is because market interest rates were very low in 2020–22.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
Our report then answers (i) what if you instead discount by a market interest rate and (ii) what if you applied this to all rounds of the data?
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
Importantly, you have to discount by a market interest rate to estimate the market value. The ONS instead discounts by forecast GDP growth. This isn't going to give a good estimate of the market value of these pensions.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
DB pensions are not a pot, but a promise of future income. To get the market value today of that future income, we have to 'discount it'. This reflects that people value £100 received next year less than receiving £100 today.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
Pensions, however, are not tradeable. We therefore have to estimate what their market value would be if they were tradeable, to create a valuation consistent with other types of assets. For DC pensions, we can just take the value of the pot.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
Even in the latest round, pension wealth is calculated in a way that's inconsistent with other types of assets. For other types of assets, wealth is essentially defined as the market value of these assets.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
Up to a few years ago, there were several problems with how official statistics calculated private pension wealth. ONS fixed many of these in the latest round of data. But they didn’t apply these fixes to previous rounds of data, leading to a structural break in the series.
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Laurence O'Brien @laurenceobrien.bsky.social · 09/04/2026
How is wealth distributed in the UK and how has this changed? Currently, official statistics don't give a good answer: they calculate pension wealth in a way that's inconsistent over time and with how other assets are valued. New @theifs.bsky.social report with Isaac Delestre fixes this: 🧵
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
You can read the full briefing, written with Jonathan Cribb and @heidikarj.bsky.social, here: ifs.org.uk/articles/sta...
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
To help support people who can’t work to a higher SPA, the government should also consider more generous means-tested support to people just below SPA. This could help maintain public support for future SPA increases.
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
But not increasing the SPA any further would significantly add to pressures on public finances. Even assuming the SPA rises to 69 in early 2070s, the OBR forecasts state pension spending to rise to almost 8% by then, from 5% today.
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
However, they have also led to a reduction in household incomes and increases in income poverty rates. Income poverty rates for 65-year-olds more than doubled following the increase from 65 to 66.
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
How have past SPA increases affected people? On the one hand, previous IFS research found that past SPA increases have led around 10% of people to delay retirement and work longer.
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
As well as rising life expectancy, the other key rationale for increasing the SPA is the benefit to public finances. The OBR estimates that net saving from increasing the SPA from 66 to 67 will be £10bn per year by the end of the parliament.
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
The SPA has risen since 2010, first to 65 for women, then to 66 for everyone. Further universal increases to 67 and 68 are legislated. Despite these SPA increases, increases in life expectancy mean the years men can expect to live after reaching SPA has been kept constant at 19.
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
Between 1948 and 2010, the SPA was unchanged at 65 for men and 60 for women. Meanwhile, life expectancy at older ages increased. As a result, the number of years people could expect to spend over SPA rose over this period.
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
From next Monday, the state pension age (SPA) will start gradually going up again from 66 to 67, affecting people born on or after 6 April 1960. What is the rationale for this? What effects might it have on people? And should we expect any further increases? [THREAD]
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
The SPA has risen since 2010, first to 65 for women, then to 66 for everyone. Further universal increases to 67 and 68 are legislated. Despite these SPA increases, increases in life expectancy mean the years men can expect to live after reaching SPA has been kept constant at 19.
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Laurence O'Brien @laurenceobrien.bsky.social · 01/04/2026
Between 1948 and 2010, the SPA was unchanged at 65 for men and 60 for women. Meanwhile, life expectancy at older ages increased. As a result, the number of years people could expect to spend over SPA rose over this period.
Years of remaining life expectancy at SPA for men, by year of birth. The figures shows that years of remaining life expectancy at SPA rose by almost 5 years between 1920 and 1950.
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Reposted by Laurence O'Brien
Heidi Karjalainen @heidikarj.bsky.social · 08/01/2026
I had a great time chatting about older people with @timharford.ft.com on BBC4 More or Less. The starting question was – are one in four pensioners really millionaires? Quick thread below: www.bbc.co.uk/sounds/play/...
bbc.co.uk
More or Less - The Stats of the Nation - Older People, Education, Prisons and the Weather - BBC Sounds
Tim Harford explores the stats on pensioners, exams, justice and climate change.
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Laurence O'Brien @laurenceobrien.bsky.social · 24/04/2025
For more detail on our research on the small pots problem, check out our report from earlier this year. ifs.org.uk/publications...
ifs.org.uk
Small pension pots: problems and potential policy responses | Institute for Fiscal Studies
What are the consequences of the proliferation of deferred small pension pots and what are the merits of different potential policy responses?
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Laurence O'Brien @laurenceobrien.bsky.social · 24/04/2025
Only consolidating pots worth <£1k would still mean many people would reach retirement with savings scattered across several pots. No timeline was announced for the consolidation of larger deferred pots. But the Minister for Pensions did indicate this could happen in the future
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Laurence O'Brien @laurenceobrien.bsky.social · 24/04/2025
The DWP report contains lots of detail on how this will be implemented in practice. They plan to create a Small Pots Data Platform to carry out the consolidation. Good to see that they will consider how this platform could build on the work done for Pensions Dashboard.
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Laurence O'Brien @laurenceobrien.bsky.social · 24/04/2025
The government has announced plans to automatically consolidate deferred pots worth up to £1k into one of a number of consolidator schemes. Overall, this will be a large improvement on the status quo, reducing costs for pension providers and complexity for individual savers.
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Laurence O'Brien @laurenceobrien.bsky.social · 24/04/2025
Earlier this year, we showed that lower earners, younger employees and women are particularly likely to accumulate these small pots.
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Laurence O'Brien @laurenceobrien.bsky.social · 24/04/2025
The proliferation of these small pots matters. First, it is costly for pension providers, leading to higher charges for savers. Second, it makes it easier for people to lose track of their savings, and much harder to make good decisions on using wealth in retirement.
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Laurence O'Brien @laurenceobrien.bsky.social · 24/04/2025
In 2024 there were over 13 million pension pots in the UK worth <£1k that are no longer being contributed to ("deferred"). This is up from around 12 million in 2023. Plus another 10 million pots worth between £1k and £10k.
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Laurence O'Brien @laurenceobrien.bsky.social · 24/04/2025
Today the government announced more detail on how they plan to tackle the large number of small pots in the UK pension system. The reforms are due to be announced in the upcoming Pension Schemes bill this spring. A few thoughts on why this matters and what was announced. 👇
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Reposted by Laurence O'Brien
Bee Boileau @beeboileau.bsky.social · 10/04/2025
We've built a new IFS tool which can be used to explore what the government spends money on, and where in the UK benefits from that spending. Here it is: ifs.org.uk/calculators/.... Short thread on what you can do with the tool:
ifs.org.uk
Where and how does the government spend its money? | Institute for Fiscal Studies
Explore how and where the government spends money, and how this has changed over time, in all regions and nations of the UK
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Reposted by Laurence O'Brien
Heidi Karjalainen @heidikarj.bsky.social · 07/04/2025
State pension age starts rising again in April 2026. Most people in their early 60s know their state pension age, but a significant minority are incorrect or unaware. This is worrying as people may base retirement and saving decisions on incorrect information. Short thread👇
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Reposted by Laurence O'Brien
Eduin Latimer @eduinlatimer.bsky.social · 12/03/2025
New report out today with colleagues @theifs.bsky.social and funded by @jrf-uk.bsky.social and @healthfoundation.bsky.social. We look at what we know about the role of changing health and reported disability in the 38% rise in people claiming disability benefits since the pandemic. A 🧵 [1/10]
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Reposted by Laurence O'Brien
The Institute for Fiscal Studies @theifs.bsky.social · 19/02/2025
NEW: Ending the small pots epidemic @laurenceobrien.bsky.social writes about why the proliferation of small deferred pension pots is burdensome, and the policy options, for Pensions Age:
buff.ly
Guest comment: Ending the small pots epidemic
IFS research economist and report author, Laurence O’Brien, takes a closer look at recent research on the small pots epidemic, arguing that it is
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Reposted by Laurence O'Brien
The Institute for Fiscal Studies @theifs.bsky.social · 18/02/2025
NEW: Median public sector pay is up by 5% in Scotland since 2019, in contrast to no UK-wide increase. Jonathan Cribb, Magdalena Domínguez and @laurenceobrien.bsky.social's new Scottish Budget report analyses Scottish public sector employment and pay, and the policy implications: [THREAD: 1/7]
Chart shows median of real hourly earnings for public sector employees in Scotland and the UK. Title states: "Median public sector pay is now higher in Scotland than in the UK overall."
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Laurence O'Brien @laurenceobrien.bsky.social · 12/02/2025
There are over 12 million DC pension pots worth <£1k. This creates complexity for savers and increases costs for providers. The government should help savers out by ensuring that their deferred small pension pots are consolidated together automatically. See 👇 for more details
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Reposted by Laurence O'Brien
Ben Zaranko @benzaranko.bsky.social · 31/01/2025
A proper piece of work, this. Some great analysis of how households responded to the energy price shock and how effective government policy was at shielding them. The implications for HM Treasury are pretty clear: build a better database! It could save you billions! ifs.org.uk/publications...
ifs.org.uk
The welfare effects of price shocks and household relief packages: Evidence from the European Energy Crisis | Institute for Fiscal Studies
How should governments respond to rapid increases in the cost of living driven by shocks to the prices of staple goods?
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Laurence O'Brien @laurenceobrien.bsky.social · 23/01/2025
Or check out @david-sturrock.bsky.social's summary thread here: bsky.app/profile/davi...
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Laurence O'Brien @laurenceobrien.bsky.social · 23/01/2025
Check out the policy report here: ifs.org.uk/publications... Or the academic working paper here: ifs.org.uk/publications...
ifs.org.uk
Ethnic differences in private pension participation after automatic enrolment | Institute for Fiscal Studies
What are the drivers of ethnic gaps in private pension participation rates and what consequences will these gaps have for future retirement incomes?
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Laurence O'Brien @laurenceobrien.bsky.social · 23/01/2025
New @theifs.bsky.social research out today! We show that Pakistani and Bangladeshi employees are almost twice as likely to opt out of their workplace pension as other employees. This can have big implications for retirement incomes and evidence points to Islamic religious beliefs as a key driver.
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Reposted by Laurence O'Brien
The Institute for Fiscal Studies @theifs.bsky.social · 17/01/2025
EVENT: Ethnicity gaps in pension participation Thurs 23 Jan 2025 | 2pm – 3pm | Online We present new findings on ethnic gaps in pension participation rates, with Taha Choukhmane, Athina Vlachantoni, @laurenceobrien.bsky.social and Carl Emmerson. Sign up here: ifs.org.uk/events/ethni...
ifs.org.uk
Ethnicity gaps in pension participation | Institute for Fiscal Studies
IFS researchers will present new findings exploring ethnic gaps in pension participation rates following the rollout of automatic enrollment.
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Laurence O'Brien @laurenceobrien.bsky.social · 10/01/2025
Understanding these drivers is key for predicting the effects of future ERA changes, both in the UK and abroad. e.g. Future UK retirees will likely have larger DC pots, which they can flexibly access before ERA. This could mean more can afford to retire before ERA, reducing its employment effect.
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Laurence O'Brien @laurenceobrien.bsky.social · 10/01/2025
We also find no evidence of employers being more likely to dismiss workers once they reach the ERA in the UK. While this is common in e.g. the Netherlands & the US, strong age discrimination laws prevent this in the UK.
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Laurence O'Brien @laurenceobrien.bsky.social · 10/01/2025
On the other hand, other mechanisms seem less important in our context. Women with larger changes in wealth due to the reform had similar changes in employment to women with smaller changes in wealth. "Wealth effects" - i.e. retiring later due to lower wealth - are therefore not a main driver.
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Laurence O'Brien @laurenceobrien.bsky.social · 10/01/2025
We find women who had low levels of financial wealth before reaching the ERA were twice as likely to retire later due to the reform as wealthier women. This suggests that "credit constraints", i.e. not being able to afford to retire before the ERA, is a key driver of the employment rise.
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Laurence O'Brien @laurenceobrien.bsky.social · 10/01/2025
This led to an increase in employment rates for women in their early 60s of just over 9 percentage points. The magnitude of the increase is consistent with studies from other countries. We compare the employment responses for different groups of women to shed light on the key drivers.
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Laurence O'Brien @laurenceobrien.bsky.social · 10/01/2025
To do this, we look at the increase in the ERA for women in the UK (often referred to as the state pension age). The female ERA increased from 60 to 66 between 2010 and 2020.
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