A Conceptual Framework for Retirement Products: Risk Sharing Arrangements Between Providers and Retirees

Voluntary annuity markets are, in most countries, smaller than what the theoretical and part of the empirical literature would suggest. There are both demand and supply constraints that hamper the development of annuity markets. In particular, traditional products available in most countries can require excessive minimum capital requirements for given investment opportunities available to providers. Investment and longevity risk should be shared between providers and annuitants so that supply constraints can be relaxed. Alternative annuity products, which imply risk sharing, could be backed by substantially lower capital investments or, equivalently, provided at substantially lower prices to consumers.

Bibliographic Details

Main Authors:	Impavido, Gregorio, Thorburn, Craig, Wadsworth, Mike
Language:	English en_US
Published:	World Bank, Washington, D.C. 2004-02
Subjects:	ACTUARIES, ADVERSE SELECTION, ANNUITIES, ANNUITIES MARKETS, ANNUITY, ANNUITY PROVIDERS, ASSETS, ASYMMETRIC INFORMATION, BANK DEPOSITS, BASIC PENSION, BONDS, CAPITAL MARKETS, CAPITAL REQUIREMENTS, COMPETITIVENESS, CONCEPTUAL FRAMEWORK, CONSUMERS, CPI, DEFERRED ANNUITIES, DISCOUNT RATE, DISCOUNT RATES, DISPOSABLE INCOME, DISTRIBUTION OF WEALTH, ECONOMIES OF SCALE, EMPIRICAL ANALYSIS, EMPIRICAL EVIDENCE, EMPIRICAL STUDIES, EXPECTED PRESENT VALUE, EXPECTED PRESENT VALUES, EXPECTED UTILITY, FINANCIAL ASSETS, FINANCIAL INSTRUMENTS, FINANCIAL MARKETS, FINANCIAL SECTOR, FUTURE RESEARCH, GDP, GROWTH POTENTIAL, HOUSING, INCOMPLETE MARKETS, INDEXED ANNUITY, INDIFFERENCE CURVES, INDIVIDUAL ACCOUNTS, INFLATION, INFLATION RISK, INSURANCE, INSURANCE MARKETS, INSURANCE PRODUCTS, INSURANCE RESERVES, INSURERS, INTEREST RATE, INTEREST RATES, INTERGENERATIONAL TRANSFERS, INVESTMENT RISK, LESS DEVELOPED COUNTRIES, LIFE ANNUITIES, LIFE CYCLE HYPOTHESIS, LIFE EXPECTANCY, LIFE INSURANCE, LIFE INSURANCE COMPANIES, LIFE INSURANCE PREMIUMS, LIQUIDITY, LONGEVITY INSURANCE, LONGEVITY RISK, MANDATORY SAVINGS, MARGINAL UTILITY, MORTALITY TABLES, NET WORTH, PENSION LIABILITIES, PENSION PLANS, PENSION REFORM, PENSION SYSTEM, PENSION SYSTEMS, PENSIONS, POLICY MAKERS, PORTFOLIO CHOICE, PREMIUMS, PRIVATE INFORMATION, PRIVATE SAVINGS, RATES, REAL INTEREST RATE, RESERVES, RETIREES, RETIREMENT, RETIREMENT AGE, RETIREMENT BENEFITS, RETIREMENT INCOME, RISK AVERSE, RISK AVERSION, RISK SHARING, SAVINGS, SINGLE LIFE ANNUITY, SOCIAL SAFETY NET, SOCIAL SECURITY, STOCKS, STREAMS, SUBSTITUTION EFFECT, TAX TREATMENT, UTILITY FUNCTION, UTILITY FUNCTIONS, VALUATION, VARIABLE ANNUITIES, VOLUNTARY ANNUITY MARKETS, WEALTH RETIREMENT, INVESTMENT, STOCKS & SHARES, RISK FACTORS, POVERTY,
Online Access:	http://documents.worldbank.org/curated/en/2004/02/3911875/conceptual-framework-retirement-products-risk-sharing-arrangements-between-providers-retirees https://hdl.handle.net/10986/14315
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