Fiscal Studies (2000) vol. 21, no. 4, pp. 469–488 © Institute for Fiscal Studies, 2000 Voluntary Contributions to Personal Pension Plans: Evidence from the British Household Panel Survey ALESSANDRA GUARIGLIA and SHERI MARKOSE * Abstract In this paper, we use data from the British Household Panel Survey (BHPS) for the years 1992 to 1998 to study the determinants of saving in the form of voluntary contributions to personal pension plans (PPPs). We first estimate a probit model with selection for the probability of making these voluntary contributions. We then estimate a random-effects tobit regression for the amounts contributed and compare the results with those of a similar regression for conventional saving. Our findings suggest that voluntary contributions to PPPs are made essentially for retirement purposes, whereas conventional saving is undertaken for precautionary motives. The former type of saving is thus unlikely to offset the latter completely. JEL classification: D12, D91, E21, I38, J32. I. INTRODUCTION During the 1980s, the UK pension system was characterised by a significant shift away from public pay-as-you-go towards private funded pension provision. Prior to 1988, employees with income above a lower earnings limit could join the State Earnings-Related Pension Scheme (SERPS), which is a pay-as-you-go earnings-related scheme, for the provision of the second-tier part of their * Guariglia is at the University of Kent at Canterbury. Markose is at the University of Essex. The authors wish to thank David Blake and two anonymous referees for constructive comments and criticisms. The financial support of the University of Essex Research Promotion Fund (grant no. DKP740) is gratefully acknowledged.