Disengagement: A Partial Solution to the Annuity Puzzle

Bateman, Hazel; Eckert, Christine; Geweke, John; Iskhakov, Fedor; Louviere, Jordan J.; Satchell, Stephen; Thorp, Susan

doi:10.2139/ssrn.2244695

Cited by 3 publications

(3 citation statements)

References 49 publications

(39 reference statements)

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“…First, recent evidence shows that people have little knowledge about superannuation (Bateman et al ., ). There is a limited awareness among the working population of the ability to make salary sacrifice contributions and the associated tax implications.…”

Section: Discussionmentioning

confidence: 99%

The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation

Feng

2014

Economic Record

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In this study, we examine choices in voluntary superannuation contributions by Australian income earners. In particular, we focus on salary sacrifice contributions, which could attract a tax benefit of up to 30 percentage points. This study aims to evaluate how effective tax incentives are in stimulating salary sacrifice participation. Using a regression discontinuity framework, we measure the response of individuals to different levels of tax concessions on salary sacrifice contributions. Results indicate that current tax incentives have a limited effect, if any, on the decision to make salary sacrifice arrangements. This result is consistent with more recent empirical research from the Northern Hemisphere. It is likely that the lack of response is due to the complexity of the incentive schemes in Australia and competing vehicles for long-term savings.

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Section: Discussionmentioning

confidence: 99%

The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation

Feng

2014

Economic Record

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“…For example, according to Cappelletti et al (2013), immediate life annuity demand is significantly lower for individuals with inferior financial literacy with respect to especially two proxies, namely knowledge of inflation and pension benefits (as cited in De Villiers-Strijdom 2021). Also, Bateman et al (2013) found that people with higher AIP awareness are more engaged with the retirement allocation decision-making process, and thus better equipped to manage longevity risk (as cited by De Villiers-Strijdom 2021).…”

Section: Annuity Puzzlementioning

confidence: 96%

Living annuity satisfaction

Villiers-Strijdom

Krige

2023

Journal of Economic and Financial Sciences

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Research approach and method: A quantitative research approach was followed by performing an ordinary least squares (OLS) linear multiple regression analysis in order to ascertain which factors associate with the satisfaction levels of living annuitants. Main findings:The most interesting conclusion is that, although one would expect active involvement in managing retirement capital among living annuitants to contribute to satisfaction levels, the desire to control and manage living annuity capital in the pursuance of capital growth, actually significantly contributes to retiree discontentment or dissatisfaction.Practical implications: Financial education and counselling with respect to optimal annuity decision-making could restore the promise of retirement income security. Contribution:Identifying the annuity puzzle factors (previously mainly reserved for immediate life annuities) that are associated with living annuitant satisfaction levels, serve as the basis for the contribution of this study.

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Section: Annuity Puzzlementioning

confidence: 96%

Living annuity satisfaction

Villiers-Strijdom

Krige

2023

J. econ. financ. sci.

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Orientation: As a standard practice, retirement capital is converted into either an immediate life annuity (annuitisation), affording significant protection against longevity risk or a living annuity (self-annuitisation), exposing capital to volatile investment returns.Research purpose: This article presents a number of exploratory factors (based on annuity puzzle literature) that associate with retirees’ satisfaction levels, with respect to the eventual outcome of their living annuity choice.Motivation for the study: Reticence among retirees to protect themselves against longevity risk is an annuity puzzle that has been the subject of vigorous academic debate.Research approach and method: A quantitative research approach was followed by performing an ordinary least squares (OLS) linear multiple regression analysis in order to ascertain which factors associate with the satisfaction levels of living annuitants.Main findings: The most interesting conclusion is that, although one would expect active involvement in managing retirement capital among living annuitants to contribute to satisfaction levels, the desire to control and manage living annuity capital in the pursuance of capital growth, actually significantly contributes to retiree discontentment or dissatisfaction.Practical implications: Financial education and counselling with respect to optimal annuity decision-making could restore the promise of retirement income security.Contribution: Identifying the annuity puzzle factors (previously mainly reserved for immediate life annuities) that are associated with living annuitant satisfaction levels, serve as the basis for the contribution of this study.

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Disengagement: A Partial Solution to the Annuity Puzzle

Cited by 3 publications

References 49 publications

The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation

The Effect of Superannuation Tax Incentives on Salary Sacrifice Participation

Living annuity satisfaction

Living annuity satisfaction

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