Download or read book Annuity Markets and Retirement Security written by James M. Poterba and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper describes the role of adverse selection in annuity markets, and sketches some of the public policy implications of the existence of such selection effects. It shows that a substantial fraction of the difference between the expected value of the payouts on both voluntary and compulsory annuity products in the U.K., and the premium cost of those products, is attributable to adverse selection. This is simply the fact that the individuals who currently choose to purchase annuities are on average longer-lived than randomly-selected individuals in the U.K. population. Adverse selection is most pronounced in the voluntary annuity market, but there is also some evidence of selection in the compulsory market, where individuals can choose which type of annuity to purchase and how much of their defined contribution balance to annuitize. Requiring all persons to annuitize their retirement account balances at a specified age is one way to substantially reduce the degree of adverse selection in the annuity market. More generally, however, any policy that encourages a large fraction of the population to participate in the annuity market is likely to have a similar effect. Doyle, Mitchell, and Piggott (2001) compare the annuity markets in Australia and Singapore, and they find a greater degree of adverse selection in the former than the latter. They attribute this difference to the relatively generous government old-age safety net in Australia, which reduces the fraction of households that find it attractive to purchase private annuities.
Download or read book Annuity Markets and Pension Reform written by George A. (Sandy) Mackenzie and published by Cambridge University Press. This book was released on 2006-07-24 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: This 2006 book treats two vital public policy issues: how should distributions from individual accounts be regulated, and how can the market for private annuities function better? It provides a comprehensive survey of the issues that arise when contributors to individual accounts become eligible for distributions. It also addresses the questions of whether annuitization or other restrictions on distributions should be mandatory, and if so, can the provision of annuities be privatized? Its analytical framework is applicable to a broad range of countries. Given the diminishing importance of public pensions around the world, the growing number of the elderly, and the increasing importance of defined contribution plans, the voluntary demand for private annuities is going to grow. It is vital that annuities be reasonably priced and that the annuity market be effectively regulated. The book investigates both issues, and proposes reforms to enhance the efficiency of the annuity market.
Download or read book The Role of Annuity Markets in Financing Retirement written by Jeffrey R. Brown and published by MIT Press. This book was released on 2001-11-09 with total page 248 pages. Available in PDF, EPUB and Kindle. Book excerpt: Annuity insurance products help protect retirees against outliving their incomes. Dramatic advances in life expectancy mean that today's retirees must plan on living into their eighties, their nineties, and even beyond. Longer life expectancies are the symbol of a prosperous society, but this progress also means that some retirees will need to plan conservatively and cut back substantially on their living standards or risk living so long that they exhaust their resources. This book examines the role that life annuities can play in helping people protect themselves against such outcomes. A life annuity is an insurance product that pays out a periodic amount for as long as the annuitant is alive, in exchange for a premium. The book begins with a history of life annuity markets during the twentieth century in the United States and elsewhere. It then explores recent trends in annuity pricing and money's worth, as well as the economic value generated for purchasers of these products. The book explains the potential importance of inflation-protected annuities and stock-market-linked variable annuities in providing more complete retirement security. The concluding chapters examine life annuities in various institutional settings and the tax treatment of annuity products.
Download or read book The Role of Annuity Markets in Financing Retirement written by Jeffrey Robert Brown and published by Mit Press. This book was released on 2001 with total page 233 pages. Available in PDF, EPUB and Kindle. Book excerpt: Annuity insurance products help protect retirees against outliving their incomes.
Download or read book Retirement Security written by United States. Congress. House. Committee on Financial Services. Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises and published by . This book was released on 2003 with total page 140 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Annuity Markets written by Edmund Stuart Cannon and published by Oxford University Press, USA. This book was released on 2008 with total page 316 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Pension Crisis concerns the changing demographic profile of the economy: an increasing number of elderly persons supported by fewer young people. Governments around the world are responding to this impending crisis by shifting their pension policies away from pay-as-you-go systems towards individual savings schemes. These savings need to be converted into a pension at retirement, and annuities provide this function. This book is a comprehensive study of annuity markets. The book starts by outlining the context of public policy towards pensions, and explains the different types of annuities available, focusing on the UK which has the largest annuity market in the world. It examines how annuities are priced, and describes the techniques of mortality measurement. As a background, it provides a history of annuities, and the experience of annuity markets in a number of other countries. The book outlines the economic theory behind annuities, and explains how annuities insure consumers against longevity risks. It goes on to describes how annuities markets function: how they work, and whether they are efficient, leading onto a discussion of the annuity puzzle. The book concludes by discussing the regulatory framework, assets available to back annuity liabilities, and recent developments in annuity markets.
Download or read book Can the Private Annuity Market Provide Secure Retirement Income written by MissAllison Schrager and published by INTERNATIONAL MONETARY FUND. This book was released on 2004-12-01 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Annuity premiums are often assumed to be constant, although they can be expected to vary with the yield curve. Variations in premiums will become an important public policy issue as defined-contribution (DC) pension plans play an increasingly prominent role in providing retirement income. As DC plan holders retire, many will annuitize at least a part of their account balances. In the absence of current data on annuity prices, the paper relies on U.S. Treasury interest rate data to simulate the impact of interest rate variation on annuity premiums. For a spectrum of feasible interest rates, the variation in retirement income is not negligible.
Download or read book Can the Private Annuity Market Provide Secure Retirement Income written by George A. (Sandy) Mackenzie and published by . This book was released on 2006 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt: Annuity premiums are often assumed to be constant, although they can be expected to vary with the yield curve. Variations in premiums will become an important public policy issue as defined-contribution (DC) pension plans play an increasingly prominent role in providing retirement income. As DC plan holders retire, many will annuitize at least a part of their account balances. In the absence of current data on annuity prices, the paper relies on U.S. Treasury interest rate data to simulate the impact of interest rate variation on annuity premiums. For a spectrum of feasible interest rates, the variation in retirement income is not negligible.
Download or read book Developing Annuities Markets written by Roberto Rezende Rocha and published by World Bank Publications. This book was released on 2007 with total page 292 pages. Available in PDF, EPUB and Kindle. Book excerpt: Developing Annuities Markets: The Experience of Chile is part of a multicountry World Bank project analyzing the market for retirement products. Among countries that have reformed their pension systems since the early 1990s, the Chilean case has emerged as the most relevant for drawing policy lessons on the role of the private sector in the provision of retirement income for two reasons: the depth, sophistication, and efficiency of the country's retirement products market, and the fact that this market was successfully developed from scratch by a middle-income country. The book examines in det.
Download or read book Securing Lifelong Retirement Income written by Noriyuki Takayama and published by OUP Oxford. This book was released on 2011-05-26 with total page 252 pages. Available in PDF, EPUB and Kindle. Book excerpt: As it becomes increasingly important to evaluate the risks and opportunities presented by an aging population, this book discusses products that manage longevity risk, the structure and safety of these products, and how policy can stimulate and strengthen them, within both emerging and older economies.
Download or read book Retirement Income written by Mark Warshawsky and published by MIT Press. This book was released on 2012 with total page 277 pages. Available in PDF, EPUB and Kindle. Book excerpt: Strategies, products, and public policies that will help a new generation of retirees maximize income and minimize risk. As members of the baby boom generation head into retirement, they face an economic environment that has changed noticeably since their parents retired. Most of these new retirees will not be equipped, as many in the earlier generation were, with private pension plans, early retirement options, and fully paid retiree health benefits in addition to Social Security and Medicare. Today it is increasingly left to retirees themselves to plan how to maximize retirement income and minimize risk. In Retirement Income, Mark Warshawsky and his colleagues describe strategies, products, and public policies that will help a new generation achieve financial security and income growth in retirement. Warshawsky, a noted expert in the field who has worked in both government and private industry, analyzes two insurance vehicles, life annuities and long-term care insurance, and their capacity to protect against the extra costs arising from longevity and disability. He proposes two innovations. The first is a strategy that includes a set percentage withdrawal from a balanced portfolio, which is gradually used to purchase a ladder of life annuities. The second proposal, which includes a description of the potential choices in product design and available tax characteristics, is a product that integrates the immediate life annuity and long-term care insurance. With Retirement Income, Warshawsky offers practical ideas based on the results of empirical investigations and analyses, which can be applied to household decision making by retirees and their financial planners and to the design of insurance products and public policy.
Download or read book Annuities and Other Retirement Products written by Roberto Rezende Rocha and published by World Bank Publications. This book was released on 2011 with total page 376 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book examines recent changes in the landscape of retirement products and annuity markets in five countries. All the selected countries (Australia, Chile, Denmark, Sweden, and Switzerland) have mandatory or quasi-mandatory savings schemes. But they also exhibit significant differences in the structure of their pension systems, the relative importance of public pillars, the role and structure of private provision, the level of annuitization, and the structure and focus of their regulatory frameworks. Five studies have been commissioned to examine the state of annuity markets in each of these countries. The findings of these studies are summarized in the last five chapters of this book. The chapters of this book is discusses the various risks faced by pensioners and the risk characteristics of alternative retirement products, and it reviews the risks faced by providers of retirement products and the management and regulatory challenges of dealing with those risks. The chapter then discusses the risks faced by providers and reviews the challenges of various regulatory issues, ranging from the institutional organization of the market for retirement products to the regulation of marketing and pricing policies and the regulation of risk management. The chapter concludes with a brief summary of main points and conclusions.
Download or read book The Decline of the Traditional Pension written by G. A. (Sandy) Mackenzie and published by Cambridge University Press. This book was released on 2010-06-21 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The traditional (final or average salary) pension that employers have provided their employees has suffered a huge decline in labor force coverage in the United Kingdom and the United States, and less severe declines in Canada and elsewhere. The traditional pension provides a precious measure of retirement security by paying retirees an annuity for life. This study compares developments in the countries just named and in Australia, Denmark, Germany, Japan, Netherlands, Sweden, and Switzerland to explain the forces behind the decline of the traditional pension and to contrast the experience of public sector employer-provided plans, where it remains dominant. Given the great value of the longevity insurance that the traditional plan provides, and the risks its diminished coverage entails, the book proposes a set of measures that either stem the decline or endow defined contribution pensions with some of the attributes of the traditional plan.
Download or read book The Role of Private Sector Annuities Markets in an Individual Accounts Reform of a Public Pension Plan written by G. A. Mackenzie and published by International Monetary Fund. This book was released on 2002-09 with total page 66 pages. Available in PDF, EPUB and Kindle. Book excerpt: Pension reforms that establish individual accounts will diminish the relative importance of the traditional state pension while creating a significant role for individual accounts in providing income for retirement. This paper surveys the policy issues this new role entails. It offers general advice to countries considering such issues as the restrictions to be placed on the timing, extent, and form of withdrawals from individual accounts and the need for mandatory annuitization (conversion into annuities) of accumulated account balances. The paper also considers the role that private annuity markets should play and related regulatory, social safety net, tax, and administrative questions.
Download or read book Annuity Markets in Comparative Perspective written by Estelle James and published by World Bank Publications. This book was released on 2000 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Preliminary result of a continuing research project that analyzes annuity markets in various countries. The projects focused on understanding whether annuity markets can be relied upon to provide reliable retirement income at reasonable prices.
Download or read book Essays in Retirement Security written by Hungyee Fong and published by . This book was released on 2011 with total page 142 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first chapter "Investment Patterns in Singapore's Central Provident Fund System" investigates how plan participants in a national defined contribution system invest their pension accumulations. I find that only a small fraction of participants elects to invest in outside investment products like professionally-managed mutual funds. Simulation results using cost data from over 200 funds demonstrate that the minimum hurdle rate of return a fund must generate is about five percent a year. Accordingly, more policy attention can be devoted to lowering fund commission charges and rationalizing the investment menu offered to participants. In the second chapter "Longevity Risk Management in Singapore's National Pension System", I evaluate the money's worth of life annuities and discuss the implications of the government entering the insurance market as a public-sector provider for annuities. I find that commercial insurers offer competitively-priced annuities with money's worth ratios averaging 0.95, which are on par with those in other developed countries. On the other hand, the new annuities launched by government under an annuitization mandate are estimated to provide money's worth ratios exceeding unity. This will benefit annuitants on average but implies that the annuity mandate will be expensive for the government if current pricing continues. The third chapter "Beyond Age and Sex: Enhancing Annuity Pricing" assesses how adopting more detailed pricing schemes may help reduce adverse selection in annuity markets. Prices of standard annuity products in the United States do not currently reflect buyers' personal characteristics other than age and sex. I show that several readily-measurable risk factors can significantly increase explained variability in mortality outcomes in a proportional hazards framework and use them to construct alternative pricing schemes. Simulation results show that more detailed pricing may help reduce adverse selection in annuity markets because shorter-lived groups are made much better off (and thus enter the market) while longer-lived groups are made only slightly worse off (and thus remain in the market).
Download or read book Aging and the Macroeconomy written by National Research Council and published by National Academies Press. This book was released on 2013-01-10 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: The United States is in the midst of a major demographic shift. In the coming decades, people aged 65 and over will make up an increasingly large percentage of the population: The ratio of people aged 65+ to people aged 20-64 will rise by 80%. This shift is happening for two reasons: people are living longer, and many couples are choosing to have fewer children and to have those children somewhat later in life. The resulting demographic shift will present the nation with economic challenges, both to absorb the costs and to leverage the benefits of an aging population. Aging and the Macroeconomy: Long-Term Implications of an Older Population presents the fundamental factors driving the aging of the U.S. population, as well as its societal implications and likely long-term macroeconomic effects in a global context. The report finds that, while population aging does not pose an insurmountable challenge to the nation, it is imperative that sensible policies are implemented soon to allow companies and households to respond. It offers four practical approaches for preparing resources to support the future consumption of households and for adapting to the new economic landscape.
