Abstract
<jats:p>This paper analyses how wealth annuitization schemes have been routinely introduced in OLG- CGE models to cope with life-length uncertainty, and shows the impact of different annuitization schemes on calibration and simulation results in the context of realistic demographic changes. Imposing full (100%) wealth annuitization leads to deeper capital accumulation (relative to a zero annuitization scheme) and, eventually, overestimates the positive economic impacts of demographic dividends in younger countries where the annuity market is thin. The analysis is reversed for countries more advanced in the ageing process. In this case, the negative impact of ageing will be overestimated (i.e., it will appear worse than it really is) relative to a more realistic assumption of little wealth annuitization.</jats:p>