Preferences for annuities in Israel and their psychological determinants

Omer Selivansky, David Leiser, Avia Spivak

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

Abstract

This chapter examines retirement savings withdrawal preferences in Israel and the psychological and demographic factors that affect them, by questioning recipients in a setting where real-life pension decisions are made. Unlike findings from other countries, most of the participants preferred annuity over a lump sum withdrawal. Lower confidence in the system and higher self-confidence were significantly associated with lump sum withdrawals preference. We suggest that the preference for an annuity stems from a default setting: pension savings in Israel have long been defined benefit (DB), that is, a fixed pension which to the recipient is more similar to an annuitized defined contribution (DC) system than to a lump sum withdrawal.

Original languageEnglish
Title of host publicationBehavioral Finance
Subtitle of host publicationA Novel Approach
PublisherWorld Scientific Publishing Co.
Pages325-348
Number of pages24
ISBN (Electronic)9789811229251
DOIs
StatePublished - 1 Jan 2020

Keywords

  • Annuity puzzle
  • Economic psychology
  • Household finance

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (all)
  • General Business, Management and Accounting

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