Should You Take A Lump-Sum Or Annuitize? Results From Swiss Pension Funds
Series
CESifo Working Paper
Type
working paper
Date Issued
2007
Author(s)
Abstract
We use a unique dataset on individual retirement decisions in Swiss pension funds to analyze the choice between an annuity and a lump sum at retirement. Our analysis suggests the existence of an "acquiescence bias", meaning that a majority of retirees chooses the standard option offered by the pensions fund or suggested by common practice. Small levels of accumulated pension capital are much more likely to be withdrawn as a lump sum, suggesting a potential moral hazard behavior or a magnitude effect. We hardly find evidence for adverse selection effects in the data. Single men, for example, whose money's worth of an annuity is considerably below the corresponding value of married men, are not likely to choose the capital option.
Language
English
Keywords
occupational pension
lump sum
annuity
choice anomalies
JEL Code: D91
JEL Code: D91
H55
J26
HSG Classification
contribution to scientific community
Refereed
No
Subject(s)
Eprints ID
215176