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Annuities for an Ageing World

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  • Olivia S. Mitchell

    (The Wharton School, University of Pennsylvania)

  • David McCarthy

    (Department of Insurance and Risk Management, The Wharton School, University of Pennsylvania)

Abstract

Substantial research attention has been devoted to the pension accumulation process, whereby employees and those advising them work to accumulate funds for retirement. Until recently, less analysis has been devoted to the pension decumulation process – the process by which retirees finance their consumption during retirement. This gap has recently begun to be filled by an active group of researchers examining key aspects of the pension payout market. One of the areas of most interesting investigation has been in the area of annuities, which are financial products intended to cover the risk of retirees outliving their assets. This paper reviews and extends recent research examining the role of annuities in helping finance retirement consumption. We also examine key market and regulatory factors.

Suggested Citation

  • Olivia S. Mitchell & David McCarthy, 2002. "Annuities for an Ageing World," CeRP Working Papers 21, Center for Research on Pensions and Welfare Policies, Turin (Italy).
    • Handle: RePEc:crp:wpaper:21
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    1. Amy Finkelstein & James Poterba, 2004. "Adverse Selection in Insurance Markets: Policyholder Evidence from the U.K. Annuity Market," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 183-208, February.
    2. Olivia S. Mitchell, 1999. "New Evidence on the Money's Worth of Individual Annuities," American Economic Review, American Economic Association, vol. 89(5), pages 1299-1318, December.
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    19. Jeffrey R. Brown & Olivia S. Mitchell & James M. Poterba, 2001. "The Role of Real Annuities and Indexed Bonds in an Individual Accounts Retirement Program," NBER Chapters, in: Risk Aspects of Investment-Based Social Security Reform, pages 321-370, National Bureau of Economic Research, Inc.
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    37. Palacios, Robert & Rofman, Rafael, 2001. "Annuity markets and benefit design in multi-pillar pension schemes : experience and lessons from four Latin American countries," Social Protection Discussion Papers and Notes 23159, The World Bank.
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    Cited by:

    1. Mitchell, Olivia S. & Piggott, John, 2004. "Unlocking housing equity in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 18(4), pages 466-505, December.
    2. Hans-Martin von Gaudecker & Carsten Weber, 2004. "Surprises in a Growing Market Niche: An Evaluation of the German Private Life Annuities Market," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 29(3), pages 394-416, July.
    3. Michiel Bijlsma & Cora Zonderland & Machiel van Dijk & Marc Pomp, 2005. "Competition in markets for life insurance," CPB Document 96, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Boyer, M. Martin & Box-Couillard, Sébastien & Michaud, Pierre-Carl, 2020. "Demand for annuities: Price sensitivity, risk perceptions, and knowledge," Journal of Economic Behavior & Organization, Elsevier, vol. 180(C), pages 883-902.
    5. Robert Holzmann & Richard Hinz, 2005. "Old Age Income Support in the 21st century: An International Perspective on Pension Systems and Reform," World Bank Publications - Books, The World Bank Group, number 7336, December.
    6. Michiel Bijlsma & Machiel van Dijk & Marc Pomp & Cora Zonderland, 2005. "Competition in markets for life insurance," CPB Document 96.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Thaut, Michael, 2003. "Die individuelle Vorteilhaftigkeit der privaten Rentenversicherung: Steuervorteile, Lebenserwartung und Stornorisiken," Tübinger Diskussionsbeiträge 264, University of Tübingen, School of Business and Economics.
    8. Juan Esteban Halcartegaray & Jorge Miranda, 2011. "Efectos del SCOMP sobre la Elección individual de Modalidad de Pensión," Working Papers 52, Superintendencia de Pensiones, revised Aug 2012.
    9. Palmer, Edward, 2008. "The market for retirement products in Sweden," Policy Research Working Paper Series 4748, The World Bank.
    10. Benjamin Avanzi & Lewis de Felice, 2023. "Optimal Strategies for the Decumulation of Retirement Savings under Differing Appetites for Liquidity and Investment Risks," Papers 2312.14355, arXiv.org, revised Mar 2024.
    11. Butler, Monika & Staubli, Stefan & ,, 2008. "The Role of the Annuity's Value on the Decision (Not) to Annuitize: Evidence from a Large Policy Change," CEPR Discussion Papers 6930, C.E.P.R. Discussion Papers.
    12. Ferro, Gustavo, 2008. "Un impulso al mercado de rentas vitalicias en España [Promoting the annuities market in Spain]," MPRA Paper 20211, University Library of Munich, Germany, revised Jul 2008.
    13. Ferro, Gustavo, 2008. "On annuities: an overview of the issues," MPRA Paper 20209, University Library of Munich, Germany, revised Oct 2009.
    14. von Gaudecker, Hans-Martin & Weber II, Carsten, 2003. "Surprises in a Growing Market Niche - An Evaluation of the German Private Annuities Market," Sonderforschungsbereich 504 Publications 03-08, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    15. Carlos Vidal-Melia & Ana Lejárraga-García, 2004. "The Bequest Motive And Single People’S Demand For Life Annuities," Public Economics 0405005, University Library of Munich, Germany.

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    More about this item

    Keywords

    Life annuities; retirement consumption;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • H4 - Public Economics - - Publicly Provided Goods

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