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The Role of the Annuity’s Value on the Decision (Not) to Annuitize: Evidence from a Large Policy Change

Monika Bütler ()

University of St. Gallen Department of Economics working paper series 2010 from Department of Economics, University of St. Gallen

Abstract: This paper presents new evidence on how the annuitization decision is affected by changes in the annuity’s value. We take advantage of an unprecedented change in policy in a number of Swiss occupational pension plans: The 20 percent reduction in the rate at which retirement capital is translated into a life-long annuity implied a net present value loss of approximately 20’000 SFR (18’000 US$) for the average affected retiree. To estimate the impact of the policy change we use administrative data from companies who did and one big company who did not change its price. Correcting for anticipation effects, we show that there was an approximately 14 percentage point decrease in the share of men choosing to annuitize their savings.

Keywords: Annuity Puzzle; Occupational Pension; Policy Change (search for similar items in EconPapers)
JEL-codes: H31 J22 H53 D13 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2010-02
New Economics Papers: this item is included in nep-age
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http://ux-tauri.unisg.ch/RePEc/usg/dp2010/DP-1005-Bu.pdf (application/pdf)

Related works:
Working Paper: The Role of the Annuity’s Value on the Decision (Not) to Annuitize: Evidence from a Large Policy Change (2008) Downloads
Working Paper: The Role of the Annuity's Value on the Decision (Not) to Annuitize: Evidence from a Large Policy Change (2008) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:usg:dp2010:2010-05

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