Consumer Preferences and Demand for Annuities: Evidence From Hong Kong

Retirees without annuities in Hong Kong confront longevity and investment risks. Despite these risks, there is very limited uptake of annuities. This study identifies product and consumer characteristics that are associated with the demand for annuities in Hong Kong. We conduct a discrete choice exp...

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Bibliographic Details
Published in:Journal of aging & social policy 2019-03, Vol.31 (2), p.170-188
Main Authors: Lee, Siu-yau, Chou, Kee-Lee, Chan, Wai-Sum, van Kippersluis, Hans
Format: Article
Language:English
Subjects:
Annuities
Annuity
Chinese
demand
Health technology assessment
Income
Investments
middle-aged workers
Retirees
Retirement
Supply & demand
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Summary:Retirees without annuities in Hong Kong confront longevity and investment risks. Despite these risks, there is very limited uptake of annuities. This study identifies product and consumer characteristics that are associated with the demand for annuities in Hong Kong. We conduct a discrete choice experiment and distribute a consumer survey among two independent representative samples of workers aged between 40 and 64. Results suggest that a fixed monthly income and a 10-year guarantee period are two significant product characteristics, while a bequest motive, being married, and an understanding of the annuity are consumer characteristics that are associated with the demand for annuities. Being presented the optimal hypothetical annuity product, approximately one-third of middle-aged workers choose to annuitize their retirement savings. The findings and methods of this study can be applied for designing annuity products in other contexts.
ISSN:0895-9420
1545-0821
DOI:10.1080/08959420.2018.1542242