What Determines Annuity Demand at Retirement?

38 Pages Posted: 23 May 2011  

Giuseppe Cappelletti

Bank of Italy

Giovanni Guazzarotti

Bank of Italy

Pietro Tommasino

Bank of Italy

Date Written: April 12, 2011

Abstract

In most advanced countries, future retirees will have to rely less on social security schemes and more on private pension plans, which mostly leave to the worker the choice between ashing-in or annuitizing pension wealth at retirement. Therefore, a better understanding of the determinants of the demand for annuities will soon become a priority. Research in this field has been hampered by lack of data (due to current market thinness) and by difficulties in disentagling demand from supply-side effects. In this paper, we avoid these problems resorting to ad hoc survey data from Italy. Our results highlight the importance of wealth, impatience, education and (to a lesser extent) financial literacy in shaping annuity demand.

Keywords: annuities, retirement, life cycle model

JEL Classification: D91, G23, H55, J26

Suggested Citation

Cappelletti, Giuseppe and Guazzarotti, Giovanni and Tommasino, Pietro, What Determines Annuity Demand at Retirement? (April 12, 2011). Bank of Italy Temi di Discussione (Working Paper) No. 805. Available at SSRN: https://ssrn.com/abstract=1849826 or http://dx.doi.org/10.2139/ssrn.1849826

Giuseppe Cappelletti

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Giovanni Guazzarotti (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Pietro Tommasino

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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