Pension Payout Preferences
There is significant interest in all three payout options. While the default option of a constant annuity is most popular, there is also substantial interest in the alternative options, with both the high/low and the lump sum option being chosen in almost 30% of cases. The preference for a specific option depends on the choice parameters and the economic setting. Interest in a lump sum is higher if the size of the lump sum increases and interest in a high/low annuity-based profile is higher when the high annuity is valid for a shorter period. Higher replacement rates and a higher interest rate both increase the preference for the constant payout pattern. Individual characteristics also play a role in the choice of the preferred option.