Riester Pensions and Life Expectancy | Munich Center for the Economics of Aging - MEA
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Research
02.11.2010 - 31.12.2017 / Social Policy and Old Age Provision

Riester Pensions and Life Expectancy

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 discourage men from investing in Riester pensions, for them premiums in life expectancy are particularly high compared to subjective expectations.

The results from this project have been documented in a MEA discussion paper and presented at various conferences. The paper has been revised submitted for publication.

Contact Person(s)
csm_bucher_01_c574cfaa96

Prof. Dr. Tabea Bucher-Koenen

Presentations and Contributions
13.07.2012
Dr. Sebastian Kluth
Subjective Life Expectancies and Private Pensions
17.09.2012
Dr. Sebastian Kluth
Subjective Life Expectancy and Private Pensions
22.04.2013
Prof. Dr. Tabea Bucher-Koenen
Subjective Life Expectancy and Private Pensions
30.04.2013
Prof. Dr. Tabea Bucher-Koenen
Subjective Life Expetancy and private Pensions