Factors Influencing the Choice of Pension Distribution at Retirement / Robert L. Clark, Olivia S. Mitchell.

Format:

Book

Author/Creator:

Clark, Robert L.

Contributor:

National Bureau of Economic Research.

Mitchell, Olivia S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w30115.

NBER working paper series no. w30115

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2022.

Summary:

One of the most important financial decisions that pension participants make concerns how they access their pension assets when they terminate employment with their plan sponsor. Their choices depend both on own preferences and the options offered by their retirement plan. This paper examines both past and future pension withdrawal choices for those with defined benefit and defined contribution pensions, separately. Our data are drawn from a set of pension distribution questions we fielded in the Understanding American Study. Results show significant differences in distribution choices based on the type of retirement plan, with individuals covered by defined benefit plans significantly more likely to select annuities compared to similar employees covered by defined contribution plans. We also find differences in how higher annual income affects annuity choices based on coverage by DB plans. Individuals with lower levels of financial literacy and lower annual income have less knowledge of basic pension characteristics.

Notes:

Print version record

June 2022.