Institute Study Finds Solution to Annuity Adoption Gap: How Integrating Lifetime Income Options to Retirement Plans Transforms Retiree Behavior
Global analysis demonstrates how Switzerland and Chile's integrated frameworks offer blueprint for U.S. retirement security reform
NEW YORK, Dec. 9, 2025 /PRNewswire/ -- A new report from TIAA Institute examining retirement systems across 11 countries finds that Switzerland and Chile have achieved notable success with structures resembling U.S. in-plan annuities - offering valuable lessons for U.S. policymakers and plan sponsors.
The research reveals a shocking pattern: when annuitization is completely voluntary and requires individuals to seek products independently, adoption rates remain consistently low across all countries studied—often below 10%. However, when the decision is integrated into the retirement plan framework, rates can exceed 50%.
"The Future of Retirement Security: Converting Savings to Income – An International Comparison" builds on last year's seven-country analysis and examines how the countries are addressing one of retirement's most pressing challenges: converting accumulated savings into sustainable lifetime income.
"All countries included in this report have strengths and weaknesses in their retirement systems," said Surya Kolluri, Head of the TIAA Institute. "While no retirement system is ideal, many countries have developed interesting solutions to the challenges posed by increasing lifespans and changing working patterns. A successful system needs to leverage the best elements of DB and DC plans to find a balance between adequacy, financial sustainability and fairness."
The study evaluates retirement systems in Australia, Canada, Chile, Germany, Japan, the Netherlands, Singapore, Sweden, Switzerland, the United Kingdom, and the United States across adequacy, financial sustainability, fairness, and plan design.
The Swiss and Chilean Models
Despite vast geographic and cultural differences, Switzerland and Chile share remarkably similar approaches. Both countries have fully integrated annuity options into their retirement systems without mandates, achieving annuitization rates of approximately 50-60% among eligible retirees.
In Chile, retirees with sufficient balances access all options—annuities, programmed withdrawals, or combinations—through a single government-run platform (SCOMP). In Switzerland, retirement plans provide annuities directly, with retirees choosing between income, lump sum, or hybrid options. Both systems leverage favorable pricing and minimal friction to encourage informed decisions.
"The transition from saving to spending represents 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 converting savings into income is seamlessly integrated into the retirement process, rather than treated as a separate, complex decision, participants are far more likely to make choices that support their long-term financial security."
The report documents a worldwide shift toward "hybrid" systems combining defined benefit guarantees with defined contribution flexibility. Key findings include:
- When annuitization is voluntary and requires independent product searches, rates remain below 10% across all countries
- Integration into plan frameworks can increase rates to 50-60% without mandates
- Middle-income participants benefit most from annuitization and are most likely to choose it when barriers are removed
The research emphasizes five essential elements for successful hybrid systems: universal participation in quality plans, adequate contribution rates, risk sharing between stakeholders, flexibility aligned with modern work patterns, and strong fiduciary oversight.
Implications for U.S. Policy
Currently in the U.S. few private sectors defined contribution plans offer an annuity option, contributing to low annuitization rates by retirees. The report recommends U.S. policymakers:
- Expand qualified default investment alternatives to include annuities with delayed liquidity features
- Strengthen fiduciary safe harbors for plan sponsors offering guaranteed income
- Require DC plans to offer menus of qualified payout options including an annuity
- Support infrastructure development through pooled employer plans
The full report is available at tiaainstitute.org.
About the TIAA Institute
The TIAA Institute* is a think-tank within TIAA, conducting cutting-edge research in the areas of financial literacy and longevity literacy, lifetime income, retirement plan design and behavioral finance in the context of retirement. The Institute provides consulting services for higher education and the broader nonprofit sector. For more information, visit www.tiaainstitute.org.
About TIAA
TIAA provides secure retirements and outcome-focused investment solutions to millions of people and thousands of institutions.i It paid more than $5.9 billion in lifetime income to retired clients in 2024ii and has nearly $1.5 trillion in assets under management (as of 09/30/2025).iii
i. |
Based on data in PLANSPONSOR's 2025 DC Recordkeeping Survey published June 25, 2025. |
ii. |
As of December 31,2024, TIAA paid out $5.9B in total annuity income. This figure represents all annuity income, including guaranteed and additional amounts, for all of TIAA's annuity products. |
iii. |
As of September 30, 2025, assets under management across Nuveen Investments affiliates and TIAA investment management teams are $1,487 billion. |
TIAA Institute is a division of Teachers Insurance and Annuity Association of America (TIAA), New York, NY.
©2025 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, New York, NY
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SOURCE TIAA Institute
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