In this paper, we present new evidence for the effect of changes in annuity prices on the decision to annuitize. We exploit an unprecedented change in policy in several Swiss occupational pension plans. There is an implied 8 percent reduction in the rate at which retirement capital is translated into an annuity, and this represents a net present value loss of CHF 18,500 (around US$ 20,000). To estimate the impact of this change, we use data from companies that changed their prices and from one large company that did not. We find that the price change reduces the propensity to annuitize among affected individuals by 16.8 percentage points.
As in many other countries, means tested benefits constitute an important part of the Swiss old age security system and disability insurance. In contrast to universal benefits, such targeted transfers are intended to only support the ones in need and thereby lead to low level of public expenses. However, individuals face strong incentives at various stages in life to adapt their behavior in order to become eligible. Using the Swiss Ergänzungsleistungen as an example, we argue that means tested benefits increase the incentive to apply for disability benefits, raise the attractiveness of early retirement, and induce individuals to favor a lump sum payment over an annuity. Moreover, they decrease the incentive to purchase private long-term care insurance.
Obligatorien und Steueranreize haben in der Schweiz zu einem sehr hohen Vorsorgevermögen geführt. Aus makroökonomischer Perspektive ist nichts gegen diese Kapitalbildung einzuwenden. Auf mikroökonomischer Ebene hingegen ist mit einer ungünstigen Verschiebung des Konsums auf das Alter zu rechnen. Diese kann zu Konsum-Engpässen bei Haushalten mit (vorübergehend) niedrigen Einkommen oder hohen Betreuungs- und Ausbildungskosten führen sowie vermehrten Frühpensionierungen Vorschub leisten.
