A new TIAA Institute report examining retirement systems in 11 countries highlights a clear pattern: when annuities are fully integrated into retirement plans, adoption rates soar—while voluntary, standalone options barely gain traction.
The report, The Future of Retirement Security: Converting Savings to Income – An International Comparison, builds on last year’s seven-country analysis, offering fresh insight into one of retirement’s toughest challenges: converting accumulated savings into sustainable lifetime income.
Low Uptake When Annuities Are Optional
Across all countries studied—including Australia, Canada, Germany, Japan, the Netherlands, Singapore, Sweden, the United Kingdom, Switzerland, Chile, and the United States—the adoption of voluntary annuities without plan integration is consistently under 10%.
“When the decision to annuitize is left entirely to individuals, adoption remains low, no matter the country,” said Surya Kolluri, Head of the TIAA Institute. “Integrating the decision into the retirement framework is the game-changer.”
Switzerland and Chile: Models Worth Watching
Two countries stand out: Switzerland and Chile. Despite different cultures and economies, both have integrated annuities into retirement systems, achieving adoption rates of 50-60% among eligible retirees—without making annuities mandatory.
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Chile: Retirees with sufficient balances choose annuities, programmed withdrawals, or a combination via a single government-run platform (SCOMP), reducing friction and complexity.
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Switzerland: Retirement plans automatically provide annuities, with retirees selecting between income, lump sum, or hybrid options, benefiting from favorable pricing and minimal administrative hurdles.
“The transition from saving to spending is one of the most critical moments in a retiree’s financial journey,” said Harriet Steel, Global Head of Institutional Distribution at Nuveen. “Our global experience shows that when this process is seamless, participants are far more likely to make choices that support long-term financial security.”
Key Takeaways for Retirement Systems
The report identifies a worldwide trend toward hybrid retirement systems, blending defined benefit guarantees with defined contribution flexibility. Key findings include:
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Voluntary, independent annuitization is ineffective: Rates stay below 10%.
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Integrated plan frameworks drive adoption: 50-60% of retirees opt in without mandates.
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Middle-income participants benefit most: They are likelier to annuitize when barriers are removed.
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Five pillars for hybrid system success:
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Universal participation in quality plans
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Adequate contribution rates
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Risk sharing among stakeholders
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Flexibility aligned with modern work patterns
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Strong fiduciary oversight
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These lessons are particularly relevant for U.S. policymakers and plan sponsors seeking to improve retirement income security without imposing mandatory annuitization. Integrating annuities directly into retirement plan frameworks, paired with user-friendly decision tools, could significantly boost adoption and improve outcomes.
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