Monika Bütler
Title
Prof. Dr. Dr. h.c.
Last Name
Bütler
First name
Monika
Email
monika.buetler@unisg.ch
Phone
+41 71 224 23 17
Twitter
@MonikaBuetler
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Item type:Publication, How Much Do Means-Tested Benefits Reduce the Demand for Annuities?(with Kim Peijnenburg) überarbeitet und neu eingereicht "Review of Economic Dynamics" We analyze the effect of means-tested benefits on annuitization decisions. Most industrialized countries provide a subsistence level consumption floor in old age, usually in the form of means-tested benefits. The availability of such means-tested payments creates an incentive to cash out (occupational) pension wealth for low and middle income earners, instead of taking the annuity. Agents trade-off the advantages from annuitization, receiving the wealth-enhancing mortality credit, to the disadvantages, giving up "free" wealth in the form of means-tested supplemental benefits. We find that the availability of means-tested benefits can reduce the desired annuitization levels substantially. Using individual level data, we show that the model's predicted annuitization rates as a function of the level of pension wealth are roughly consistent with the cash-out patterns of occupational pension wealth observed in Switzerland.Type:discussion paperIssue:3493