Information and Engagement in Choosing Annuities: A Survey of Pre-retirees
Current trends show that most economically developed countries have seen public and private pension programs move away from defined-benefit plans and toward defined-contribution plans. This shift gives consumers more choices as they make investment choices and plan for retirement. These choices can range from annuity investments that offer guaranteed lifetime income, to flexible accounts that require periodic drawdowns and come with more options. More variety can be an attractive incentive to retirement planning, but the details of individual products can be confusing if consumers do not know how products work or how to weigh the risks and benefits of specific plans. Hazel Bateman and colleagues conducted an online survey of Australian and Dutch pre-retirees aged 50–64 to understand how individuals plan to make retirement benefit decisions once they stop working and to determine whether partial or full annuitization would be more appealing to them.
In designing the survey, the authors focused on how the perception of lifetime annuity investment products might differ from flexible drawdown plans in two economically developed countries—Australia and the Netherlands—where the choices between pension plans are similar yet have different methods of payment distribution. They examined the behavior of approximately 1,000 Australians and 1,000 Dutch consumers aged 50–64 who were either pre-retirees or who were part of a couple where at least one person was not retired.