Citation

Discussion Paper Details

Please find the details for DP6930 in an easy to copy and paste format below:

Full Details | Bibliographic Reference

Full Details

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

Author(s): Monika B�tler, Stefan Staubli and Maria Grazia Zito

Publication Date: August 2008

Keyword(s): Annuity Puzzle, Occupational Pension and Policy Change

Programme Area(s): Public Economics

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 unprecendented change in policy, which in 2004 moderated the super-mandatory Swiss occupational pension scheme: The 20 percent reduction in the rate at which retirement capital is translated into a life-long annuity equates to a net present value loss of approximately 20'000 SFR (20'000 US$) for the average retiree. Using administrative data and correcting for anticipation effects, we show that due to the change in policy there was an approximately 8 percentage point change in the share of men choosing to annuitize their savings. We also show that the estimated responsiveness of the cash-out decision to variations in a utility based measure for the annuity value is comparable to results of previous studies, which employed completely different sources of variation in the annuity's value.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6930

Bibliographic Reference

B�tler, M, Staubli, S and Zito, M. 2008. 'The Role of the Annuity's Value on the Decision (Not) to Annuitize: Evidence from a Large Policy Change'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6930