Factors Influencing the Choice of Pension Distribution at Retirement

Loading...
Thumbnail Image
Penn collection
Wharton Pension Research Council Working Papers
Degree type
Discipline
Subject
Pensions
distribution choices
financial literacy
Economics
Funder
Grant number
License
Copyright date
Distributor
Related resources
Author
Clark, Robert L.
Contributor
Abstract

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.

Advisor
Date Range for Data Collection (Start Date)
Date Range for Data Collection (End Date)
Digital Object Identifier
Series name and number
Publication date
2022-05-01
Volume number
Issue number
Publisher
Publisher DOI
Journal Issue
Comments
This research was performed pursuant to a grant from the Institute of Consumer Money Management; the authors also acknowledge support from the Pension Research Council/Boettner Center at the Wharton School of the University of Pennsylvania.
Recommended citation
Collection