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What determines annuity demand at retirement?

  • Giuseppe Cappelletti


    (Bank of Italy)

  • Giovanni Guazzarotti


    (Bank of Italy)

  • Pietro Tommasino


    (Bank of Italy)

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.

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Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 805.

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Date of creation: Apr 2011
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Handle: RePEc:bdi:wptemi:td_805_11
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