Subjective life expectancy and private pensions


Bucher-Koenen, Tabea ; Kluth, Sebastian



URL: http://mea.mpisoc.mpg.de/uploads/user_mea_discussi...
Additional URL: https://pdfs.semanticscholar.org/ee2a/097d7e9e33b9...
Document Type: Working paper
Year of publication: 2012
The title of a journal, publication series: MEA Discussion Papers
Volume: 14-2012
Place of publication: München
Publishing house: Munich Center for the Economics of Aging
Publication language: English
Institution: Business School > Finanzmärkte (Bucher-Koenen 2019-)
Subject: 300 Social sciences, sociology, anthropology
330 Economics
Abstract: One important parameter in the decision process when buying a private annuity is individuals´ subjective life expectancy, because it directly influences the expected rate of return. We examine the market for private annuities in Germany and evaluate potential selection effects based on subjective life expectancy. First individuals are pessimistic about their life span compared to the official life tables. Second we find a significant selection effect based on subjective life expectancy for women who invest in private annuity contracts - so called Riester pensions. For men there seems to be no difference in subjective life expectancy by Riester ownership. Comparing the size of this selection effect with the underlying loading in life expectancy charged by the insurance industry shows that the latter appears to be in line for women but very high for men. Our findings have strong policy implications. On the one hand misperceptions about longevity risk might prevent individuals from providing sufficiently for retirement. On the other hand mandated unisex tariffs might especially discourade men from investing in Riester pensions, for them premiums in life expectancy are particularly high compared to subjective expectations.
Additional information: Andere MEA-Zählung: 265-12

Dieser Datensatz wurde nicht während einer Tätigkeit an der Universität Mannheim veröffentlicht, dies ist eine Externe Publikation.




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Bucher-Koenen, Tabea ; Kluth, Sebastian (2012) Subjective life expectancy and private pensions. MEA Discussion Papers München 14-2012 [Working paper]


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