Who foregoes survivor protection in employer-sponsored pension annuities?
OBJECTIVE
Retirees in traditional pension plans must generally choose between single life annuities, which provide regular payments until death, and joint and survivor annuities, which pay less each month but continue to make payments to the spouse after the death of the retired worker. This article examines the payout decision and measures the share of married retirees with pension annuities who forego survivor protection.


METHODS
The analysis consists of a probit model of the pension payout decision, based on data from the 1992-2000 waves of the Health and Retirement Study.


RESULTS
More than one quarter (28%) of married men and two thirds of married women receiving employer-sponsored retirement annuities declined survivor protection. Men with small pensions and limited household wealth, men in better health than their spouses, and men whose spouses have pension coverage from their own employers are more likely than other men to reject survivor protection.


CONCLUSIONS
Most workers appear to make payout decisions by rationally balancing the costs and benefits of each type of annuity, suggesting that existing measures to encourage joint and survivor annuities are adequate. However, the growth in 401(k) plans, which are generally not covered by existing laws protecting spousal pension rights, may leave widows vulnerable.
Johnson
Richard W
RW
The Urban Institute, 2100 M Street, NW, Washington, DC 20037, USA. rjohnson@ui.urban.org
Uccello
Cori E
CE
Goldwyn
Joshua H
JH
D005260:Female; D006801:Humans; D008297:Male; D015999:Multivariate Analysis; D010415:Pensions; D012959:Socioeconomic Factors; D018454:Spouses; D014481:United States