More on annuities vs. programmed withdraws

In a previous note we stated that in general, individuals eligible to chose between annuities or programmed withdraws should chose annuities as they are the ones that guarantee a higher pension. Next graph support that idea but with a different analysis. The graph shows the rate of return of the funds invested in pensions fund managers (PFM) needed for programmed withdraws pensions be equal to annuities. As can be seen, the real rate of return must increase over time until reach high values, something that rarely happens in the countries.