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The determinants of annuitization: evidence from Sweden
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2015 (English)In: International Tax and Public Finance, ISSN 0927-5940, E-ISSN 1573-6970, Vol. 22, no 4, 549-578 p.Article in journal (Refereed) Published
Abstract [en]

Despite the fact that the increasing involvement of the private sector in pension provision has brought more flexibility to the pay-out phase of retirement, little is known about the characteristics of those who choose to annuitize their pension wealth and those who do not. I combine unique micro-data from a large Swedish occupational pension plan with rich national administrative data to study the choice between life annuities and fixed-term payouts with a minimum payout length of 5 years for 183,000 retiring white-collar workers. I find that low accumulation of assets is strongly associated with the choice of the 5-year payout. Consistent with individuals selecting payout length based on private information about their mortality prospects, individuals who choose the 5-year payout are in worse health, exhibit higher ex-post mortality rates and have shorter-lived parents than annuitants. Individuals also seem to respond to large, tax-induced changes in annuity prices.

Place, publisher, year, edition, pages
Uppsala Univ, Dept Econ, S-75120 Uppsala, Sweden., 2015. Vol. 22, no 4, 549-578 p.
Keyword [en]
Annuity puzzle, Longevity insurance, Occupational pension, Adverse selection, Administrative data
National Category
Economics and Business
URN: urn:nbn:se:uu:diva-264325DOI: 10.1007/s10797-015-9360-5ISI: 000361006000003OAI: oai:DiVA.org:uu-264325DiVA: diva2:861064
The Jan Wallander and Tom Hedelius Foundation
Available from: 2015-10-15 Created: 2015-10-09 Last updated: 2015-12-07

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Hagen, Johannes
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