We provide new empirical evidence on the importance of defined contribution pension wealth in England, and the nature of annuitization decisions taken by older adults who retire with such sources of wealth. Other things equal, financial literacy, and numeracy in particular, are important factors governing individuals’ choices over whether to shop around for an annuity as opposed to taking the ‘path of least resistance’ option and purchasing from their original pension fund provider. This has important policy and welfare implications given that buying an annuity on the open market has significant financial benefits for most people. In the context of the increasing reliance on private provision for retirement, the importance of individuals having the financial literacy to successfully navigate complex financial decisions late in life should not be underestimated.
Authors
![James Banks](/sites/default/files/styles/square_desktop/public/2022-06/James_Banks.jpg?itok=EvmV7fKj)
CPP Co-Director
James is Senior Research Fellow and Professor of Economics at Manchester, working on broad issues in the economics of retirement, savings and health.
![Person graphic](/sites/default/files/styles/square_desktop/public/2022-06/IFS-person-graphic.png?itok=hWCtTSrz)
Gemma Tetlow
![Person graphic](/sites/default/files/styles/square_desktop/public/2022-06/IFS-person-graphic.png?itok=hWCtTSrz)
Rowena Crawford
Journal article details
- DOI
- 10.1017/S1474747215000256
- Publisher
- Cambridge University Press
- JEL
- D14, D91
- Issue
- Volume 14, Issue 4, October 2015, pages 412-438
Suggested citation
J, Banks and R, Crawford and G, Tetlow. (2015). 'Annuity choices and income drawdown: Evidence from the decumulation phase of defined contribution pensions in England' 14, Issue 4(2015), pp.412–438.
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