A Summary and Update of Developing Annuities Markets : The Experience of Chile

The rapid growth of the market for retirement products in Chile has its origins in the pension reform that was implemented in 1981. But the successful development of an active annuity market also reflects many other factors. This paper summarizes and updates an earlier longer study on the development of the Chilean annuity market. The update focuses on the numerous changes that were introduced in 2008. The most striking aspect of the Chilean experience is the very high rate of annuitization. This has been linked to the restrictions that have been applied to lump-sum withdrawals, the offer of inflation-protected annuities, and the robust prudential regulation of providers. But the level of annuitization has also been supported by the annuitization incentives provided to early retirees and the influence of brokers and sales agents. The recent regulatory changes have weakened the impact of the last two factors, while strengthening the demand for annuities at normal retirement.

Bibliographic Details

Main Authors:	Rocha, Roberto, Rudolph, Heinz P.
Language:	English
Published:	2010-06-01
Subjects:	ACCOUNTING, ANNUITIES MARKETS, ANNUITY, ANNUITY MARKET, ANNUITY PAYMENT, ANNUITY PROVIDERS, ANNUITY RATE, ANNUITY RATES, ASSET MANAGEMENT, ASSET MANAGERS, BALANCE SHEET, BALANCE SHEETS, BANK BONDS, BANKRUPTCY, BANKRUPTCY RISK, BANKRUPTCY RISKS, BARRIER TO ENTRY, BASIS POINTS, BENEFICIARIES, BENEFICIARY, BENEFIT FORMULA, BENEFIT PAYMENTS, BEQUEST, BEQUESTS, BIDDING PROCESS, BOND, BOND FUNDS, BOND PORTFOLIOS, BROKER, BROKERS, CAPITAL ADEQUACY, CAPITAL MARKET, CAPITAL MARKETS DEVELOPMENT, CAPITAL REQUIREMENT, CASH FLOWS, CENTRAL BANK, COMPETITIVE MARKET, CONTINGENT LIABILITY, CONTRIBUTION RATES, CORPORATE BOND, CORPORATE BONDS, CREDIT ENHANCEMENT, CREDIT RISK, CREDIT STANDINGS, DEBT, DEBT INSTRUMENTS, DEFAULTS, DEFERRED ANNUITIES, DEFERRED ANNUITY, DEFINED BENEFIT, DEFINED-CONTRIBUTION PENSION, DEPOSITS, DERIVATIVES, DISABILITY PENSION, DISABILITY PENSIONS, DIVERSIFIED PORTFOLIO, EARLY RETIREMENT PENSIONS, ELDERLY, ELECTRONIC PAYMENT SYSTEMS, EQUITY FUNDS, EXCHANGE RATE, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL MARKETS, FIXED ANNUITIES, FIXED INCOME, FIXED INCOME PORTFOLIO, FOREIGN INVESTMENTS, FREE BONDS, GLOBAL CAPITAL, GLOBAL CAPITAL MARKETS, GOVERNMENT BONDS, GOVERNMENT GUARANTEES, GUARANTEED PERIOD, HOUSING FINANCE, INCOME INSTRUMENTS, INCOME LEVELS, INCOME STREAMS, INDEXED ANNUITIES, INDIVIDUAL ACCOUNT, INFLATION, INFLATION RISK, INFLATION RISKS, INSTRUMENT, INSURANCE, INSURANCE COMPANIES, INSURANCE COMPANY, INSURANCE MARKET, INSURANCE PREMIUM, INSURANCE PREMIUMS, INTEREST RATE, INTERMEDIATION SPREAD, INTERMEDIATION SPREADS, INTERNAL RATE OF RETURN, INTERNAL RATES OF RETURN, INTERNATIONAL BANK, INTERNATIONAL STANDARDS, INVESTING, INVESTMENT FUNDS, INVESTMENT HORIZON, INVESTMENT RATE, INVESTMENT RETURN, INVESTMENT RETURNS, INVESTMENT RISK, JOINT ANNUITIES, LABOR FORCE, LABOR INCOME, LABOR MARKET, LEVEL OF INTEREST RATES, LEVIES, LEVY, LIFE ANNUITIES, LIFE EXPECTANCY, LIFE INSURANCE, LIFE INSURANCE COMPANIES, LIFE INSURANCE PREMIUMS, LIQUID INSTRUMENTS, LIQUIDITY, LIQUIDITY PREMIUM, LONG-TERM ASSETS, LONGEVITY INSURANCE, LONGEVITY RISK, LONGEVITY RISKS, LUMP SUM WITHDRAWALS, MANDATORY COVERAGE, MANDATORY SAVINGS, MARK-TO-MARKET, MARKET CONCENTRATION, MARKET CONDITIONS, MARKET INTEREST RATES, MARKET SHARE, MARKET VALUES, MATURITIES, MATURITY, MORAL HAZARD, MORTALITY, MORTALITY TABLE, MORTGAGE, MORTGAGE BOND, MORTGAGE BONDS, MORTGAGE-BACKED SECURITIES, MUTUAL FUNDS, NORMAL RETIREMENT AGE, OBLIGATORY RESERVE, PENSION, PENSION ACCOUNTS, PENSION ASSETS, PENSION FUND, PENSION FUND ADMINISTRATORS, PENSION FUND ASSETS, PENSION FUND MEMBERS, PENSION FUNDS, PENSION FUNDS INSURANCE, PENSION INSURANCE, PENSION LAW, PENSION REFORM, PENSION REFORMS, PENSION SECTOR, PENSION SYSTEM, PENSION SYSTEMS, PENSIONERS, PENSIONS, PILLAR BENEFIT, PORTFOLIO, PORTFOLIOS, PREPAYMENT, PREPAYMENT RISKS, PRIVATE EQUITY, PRIVATE PENSION, PRIVATE PENSION FUNDS, PRIVATE PENSION SYSTEMS, PRIVATE PLACEMENTS, PROFIT MARGINS, PRUDENTIAL REGULATION, PUBLIC MARKETS, PUBLIC PENSION, PUBLIC PILLAR, QUOTATION SYSTEM, RATES OF INTEREST, RATES OF RETURN, REAL INTEREST, REAL INTEREST RATES, REGULAR PAYMENTS, REGULATORY FRAMEWORK, REINVESTMENT, REINVESTMENT RATE, REPLACEMENT RATES, RESERVE, RESERVES, RETIREE, RETIREES, RETIREMENT, RETIREMENT AGE, RETIREMENT BENEFITS, RETIREMENT INCOME, RETIREMENT PHASE, RETIREMENT PRODUCT, RETIREMENT PRODUCTS, RETIREMENT SYSTEM, RETIRING WORKERS, RETURN, RETURNS, RETURNS ON EQUITY, RISK MANAGEMENT, RISK POOLING, RISK PREMIUMS, RISK PROFILES, RISK SHARING, RISK-FREE RATE, SHARE OF EQUITIES, STATE GUARANTEES, SUPERVISORY AGENCY, SURVIVOR PENSIONS, TAX, TRANSPARENCY, TREASURY, TREASURY BONDS, TURNOVER, VALUATION, VALUE OF ASSETS, VARIABLE ANNUITIES, WAGE GROWTH, WITHDRAWAL, YIELD CURVE,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100601090117 https://hdl.handle.net/10986/3811
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