1. ¹Mannheim Research Institute for the Economics of Ageing, Department of Economics, University of Mannheim
2. ²Institute of Insurance Science and Department of Business Administration, University of Mannheim

^*We would like to thank Axel Börsch-Supan and Anette Reil-Held for suggesting this paper and many helpful comments; the latter also applies fully to Peter Albrecht and Alexander Ludwig. Finally we appreciate data provision by Thomas Lueg from GDV. Any remaining flaws are the authors' sole responsibility.

Abstract

High replacement rates from public old age insurance might lead to the belief that little room is left for private sector life annuities in Germany. Taking a closer look, we find a small market with a surprisingly large variety of products. Due to the recent pension reform and future ones to come the market is projected to grow substantially in the years to come. This paper describes the life annuity contracts available and determines their money's worth for different subgroups of the population.