Insight: The Annuity Puzzle and the Role of Pension Plan Structure and Decision Framing
By Jason Fichtner
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The authors’ research findings suggest the following insights: (1) Low annuitization rates might be explained by pension plan structure design (i.e., a plan might require a survey participant to take a retirement benefit in the form of a lump-sum payment if the individual has an account balance below a certain threshold), rather than consumer preferences. (2) The framing of the annuitization decision for retirees might impact their decisions, with a consumption frame promoting annuitization and an investment frame discouraging annuitization.
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About the Author
Jason J. Fichtner is Chief Economist at the Bipartisan Policy Center and Senior Fellow at the Retirement Income Institute.