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Summary
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their opinions about the possibility of withdrawing pensions over a
fixed number of years and about potential future developments.
Furthermore, examples have been calculated to show the effect on the
private economy of individuals and on the public economy of
withdrawing pensions over a fixed number of years instead of as
annuities.
Simulations of the effect on the whole economy from decreasing
levels of annuitised occupational pensions have also been conducted,
using the micro-simulation model FASIT. The simulations were run
by Statistic Sweden (SCB).
Findings
The share of retirees choosing to withdraw their pensions over a fixed
number of years has been increasing during recent years. It is
evidently some of the occupational pensions financed through defined
contributions (ITPK, Kåpan Tjänste and the individual part of KAP-
KL) that are being withdrawn over a fixed number of years instead of
as life annuities. A large majority of the pensioners chose to annuitise
the defined-benefit pension ITP 2 and the defined-contribution
pension SAF-LO. It is only possible to withdraw the defined-benefit
pensions in PA 03 and KAP-KL as life annuities.
It is also evident that the probability of annuitisation differs between
retirement age and income groups. Younger retirees (less than 65
years old) and retirees with a lower income more commonly choose
to withdraw their occupational pensions over a fixed number of years.
There is no evidence of any gender differences in withdrawal patterns
in this study.
Possible causes for the decrease in annuitisation of occupational
pensions are discussed in the report:
–
Today, it is possible to withdraw the pension over a fixed
number of years. In older occupational pension plans this was
not an option. Henceforth, some pensioners are now taking the
opportunity.
–
The pension capital in the relatively new defined contribution
plans is still quite small, which can induce pensioners to
withdraw their whole capital in a few years.