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Payouts in Switzerland: Explaining Developments in Annuitization

  • Monika Bütler

    ()

  • Stefan Staubli

    ()

Switzerland is one of the few countries with long-term experience on the payout decisions made by retirees in fully-funded pension plans. Switzerland is also atypical in its unusually high annuitization rates: A majority of retirees covered by mandatory occupational pension plans choose an annuity. This paper will shed light on this extraordinary aspect. It 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 of the scheme. 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 (MWR), means-tested benefits and behavioral factors.

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File URL: http://www1.vwa.unisg.ch/RePEc/usg/dp2010/DP-1006-Bu.pdf
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Paper provided by Department of Economics, University of St. Gallen in its series University of St. Gallen Department of Economics working paper series 2010 with number 2010-06.

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Length: 32 pages
Date of creation: Feb 2010
Date of revision:
Handle: RePEc:usg:dp2010:2010-06
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  1. Brown, Jeffrey R., 2001. "Private pensions, mortality risk, and the decision to annuitize," Journal of Public Economics, Elsevier, vol. 82(1), pages 29-62, October.
  2. Monika Bütler & Federica Teppa, 2007. "The choice between an annuity and a lump sum: Results from Swiss pension funds," NBER Chapters, in: Trans-Atlantic Public Economics Seminar (TAPES), Public Policy and Retirement, pages 1944-1966 National Bureau of Economic Research, Inc.
  3. Monika Bütler & Kim Peijnenburg & Stefan Staubli, 2013. "How Much Do Means-Tested Benefits Reduce the Demand for Annuities?," NRN working papers 2013-11, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  4. Monika Bütler, 2010. "The Role of the Annuity’s Value on the Decision (Not) to Annuitize: Evidence from a Large Policy Change," University of St. Gallen Department of Economics working paper series 2010 2010-05, Department of Economics, University of St. Gallen.
  5. Olivia S. Mitchell & James M. Poterba & Mark J. Warshawsky, 1997. "New Evidence on the Money's Worth of Individual Annuities," NBER Working Papers 6002, National Bureau of Economic Research, Inc.
  6. Esther Duflo & Emmanuel Saez, 2002. "The Role of Information and Social Interactions in Retirement Plan Decisions: Evidence from a Randomized Experiment," NBER Working Papers 8885, National Bureau of Economic Research, Inc.
  7. Laibson, David I. & Madrian, Brigitte C. & Choi, James J., 2009. "Mental Accounting in Portfolio Choice: Evidence from a Flypaper Effect," Scholarly Articles 4686774, Harvard University Department of Economics.
  8. Monika Queisser & Edward R. Whitehouse, 2003. "Individual Choice in Social Protection: The Case of Swiss Pensions," OECD Social, Employment and Migration Working Papers 11, OECD Publishing.
  9. Emmanuel Saez & Esther Duflo, 2003. "The role of information and social interactions in retirement plan decisions: Evidence from a randomized experiment," Framed Field Experiments 00141, The Field Experiments Website.
  10. Monika B�tler, 2009. "Switzerland: High Replacement Rates and Generous Subsistence as a Barrier to Work in Old Age," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 34(4), pages 561-577, October.
  11. Queisser, Monika & Vittas, Dimitri, 2000. "The Swiss multi-pillar pension system : triumph of common sense?," Policy Research Working Paper Series 2416, The World Bank.
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