Payouts in Switzerland: Explaining Development in Annuitization

Switzerland is one of the few countries with long-term experience in withdrawal decisions made by retirees in fully funded pension plans. Switzerland is also atypical in its unusually high annuitization rates, and indeed, a majority of retirees covered by mandatory occupational pension plans chooses an annuity at retirement. This chapter revisits the historical role of occupational pension plans in the provision of old-age income, and examines the role of regulation in the payout phase. Recent developments in both market conditions and regulations are used to assess the impact of certain determinants of the annuitization decision, such as money's worth ratios, means-tested benefits, and behavioral factors.