Who Would Buy an Annuity? An Empirical Investigation

Abstract

The debate around annuity compulsion and proposed pension reforms provides an appropriate context for exploring consumer attitudes to annuitisation. A substantial sample of those approaching or just into retirement were polled as to willingness to annuitise and preferred timing. Questions allowed choices between lump sums and annuities which increased with age of inception. Results were analysed according to the characteristics of respondents. A majority emerged against annuitisation and among those that were willing to annuitise, there were more preferences for doing so at younger ages. Those with poorer education, incomes or health were more likely to be opposed to annuitisation. Some policy issues and areas for future research were identified.

Keywords: Annuity, Reform, Compulsion

JEL Classification: G20, G22, G23