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Understanding demand for flexible pension payouts: evidence from the Netherlands

Published online by Cambridge University Press:  20 October 2023

Rik Dillingh  and
Maria Zumbuehl Open the ORCID record for Maria Zumbuehl [Opens in a new window]
Rik Dillingh*
Affiliation:
Netherlands Bureau for Economic Policy Analysis (CPB), Den Haag, The Netherlands
Maria Zumbuehl
Affiliation:
Netherlands Bureau for Economic Policy Analysis (CPB), Den Haag, The Netherlands
*
Corresponding author: Rik Dillingh; Email: w.f.dillingh@cpb.nl
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Abstract

This study examines the interest in different pension payout schemes when full annuitization is the default. We focus on three possible pension payout schemes: a flat-rate annuity, a high/low annuity-based profile, and a partial lump sum at retirement with a lower flat-rate annuity after that. We make use of a vignette study and find substantial interest in each of the three payout schemes. Interest in the lump sum scheme increases when a higher percentage can be taken out as a lump sum or when interest rates or replacement rates are lower. Interest in a high/low annuity-based profile increases when the high annuity is valid for a shorter period.

Keywords

annuitiesconsumer choicelump sumpensionsurvey experiment

JEL classification

G41: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets‡ D14: Household Saving • Personal Finance H31: Household J32: Nonwage Labor Costs and Benefits • Retirement Plans • Private Pensions
Type
Article
Information
Journal of Pension Economics & Finance , First View , pp. 1 - 23
Copyright
Copyright © The Author(s), 2023. Published by Cambridge University Press

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