Evidence on Annuity Choices in Chile

Abstract

This study analyzes the empirical determinants of the annuity choice using data on retirees from the Chilean labor market. We find that sales agents, knowledge about the pension system, and greater education will be associated with an increase in the annuitization probability. Also, we expect that people in poor health are less likely to annuitize, which is supportive of the traditional view of adverse selection in the annuity market. Finally, we analyze the effects on annuity choices of the introduction of a Minimum Pension Guarantee.