What makes a market for annuity contracts successful, and what are the key demand and supply constraints that affect the performance of such a market?
In many countries, questions about the structure of annuity markets are becoming increasingly important subjects of policy debates, particularly as pension reforms promote public-private partnerships as a way to improve the financial security of retiring workers. Using data on annuity contracts from Chile, this paper examines an imperfectly competitive market where firms have private information about their annuitization costs.
The authors used rich and unique data on over a decade of annuity contracts bought and sold in Chile from 2007 to 2018. Chile is one of the first countries to use a public-private system to provide annuity pensions to its retirees.