The Mechanics and Regulation of Variable Payout Annuities

This paper discusses the mechanics and regulation of participating and unit-linked variable payout annuities. These annuities offer benefits that are not fixed in either nominal or real terms but depend on the performance of the fund or funds in which the underlying reserve assets are invested, their profit sharing features, and the treatment of longevity risk. The paper focuses on the treatment of investment and longevity risks by different types of these annuities and underscores the challenge of establishing a robust and effective framework of regulation and supervision for these products. The paper also addresses the exposure of annuitants to integrity risk and places special emphasis on the need for a high level of meaningful transparency.

Bibliographic Details

Main Author:	Vittas, Dimitri
Language:	English
Published:	2011-08-01
Subjects:	ACCOUNTING, ACCOUNTING STANDARDS, ACCUMULATED SAVINGS, ACTIVE MARKETS, ACTUARIES, ADVERSE SELECTION, AFFILIATED ORGANIZATIONS, AGENTS, ANNUAL RETURNS, ANNUITY, ANNUITY FACTOR, ANNUITY MARKET, ANNUITY MARKETS, ANNUITY PAYMENTS, ANNUITY PROVIDERS, ASSET MANAGEMENT, ASSET MANAGERS, ASSET PORTFOLIOS, ASSET PRICES, ASSETS, BANKRUPTCY, BANKRUPTCY RISK, BASIC PENSION, BENEFIT PAYMENTS, BEQUEST, BEQUESTS, BOND, BOND MARKETS, BROKER, BROKERS, CAPITAL REQUIREMENTS, COMMISSIONS, CONFLICTS OF INTEREST, CONSUMER PROTECTION, CONSUMERS, CORPORATE BONDS, COST OF CAPITAL, DEVELOPING COUNTRIES, DISCLOSURE, DISCOUNT RATE, DISCOUNT RATES, EQUITIES, EQUITY CAPITAL, EQUITY MARKETS, EQUITY RETURNS, EQUITY RISK PREMIUM, FAIR VALUE, FINANCIAL MANAGEMENT, FINANCIAL MARKET, FINANCIAL MARKETS, FINANCIAL PERFORMANCE, FINANCIAL RISKS, FINANCIAL SECTOR DEVELOPMENT, FIXED ANNUITIES, FIXED INCOME, FIXED LIABILITIES, FUNDED COMPONENT, FUNDED PENSION, FUTURE MORTALITY IMPROVEMENTS, FUTURE PAYMENTS, GOVERNMENT BONDS, GOVERNMENT GUARANTEES, GOVERNMENT REGULATION, GUARANTEED BENEFIT, GUARANTEED BENEFITS, GUARANTEED PERIODS, GUARANTEED RATES, HEALTH STATUS, INCOME BONDS, INCOME SECURITY, INDEXED ANNUITIES, INDIVIDUAL ACCOUNTS, INDIVIDUAL INVESTORS, INFLATION, INFLATION RISK, INFLATION RISKS, INFORMED DECISIONS, INSURANCE, INSURANCE COMPANIES, INSURANCE MARKETS, INTEGRITY, INTEREST RATE, INTEREST RATE SWAPS, INTEREST RATES, INTERNATIONAL BANK, INVESTING, INVESTMENT FUND, INVESTMENT FUNDS, INVESTMENT INCOME, INVESTMENT OBJECTIVE, INVESTMENT PERFORMANCE, INVESTMENT PRODUCTS, INVESTMENT RATE, INVESTMENT RETURN, INVESTMENT RETURNS, INVESTMENT RISK, INVESTMENT RISKS, INVESTMENT STRATEGY, LABOR MARKET, LACK OF TRANSPARENCY, LEVEL OF RISK, LIABILITY, LIFE ANNUITIES, LIFE EXPECTANCY, LIFE INSURANCE, LIFE INSURANCE POLICIES, LIQUIDITY, LOCAL MARKETS, LONG-TERM CARE, LONG-TERM INVESTMENTS, LONGEVITY ADJUSTMENT, LONGEVITY INSURANCE, LONGEVITY RISK, LONGEVITY RISKS, LOW INFLATION, MARKET COMPETITION, MARKET CONCENTRATION, MARKET LEVELS, MARKET PRACTITIONERS, MARKET PRICES, MARKET REGULATORS, MARKET RETURNS, MARKET SHARE, MARKET STRUCTURE, MARKET TRANSPARENCY, MARKET VALUES, MATURITY, MINIMUM BENEFITS, MORTALITY, MORTALITY TABLE, MORTALITY TABLES, MORTGAGE, MORTGAGE BONDS, MUTUAL INSURANCE COMPANIES, OCCUPATIONAL SCHEME, OLDER PERSONS, PAYOUT, PENSION, PENSION BENEFITS, PENSION FUNDS, PENSION SCHEME, PENSION SCHEMES, PENSION SYSTEM, PENSION SYSTEMS, PENSIONERS, PENSIONS, PERSONAL PENSION, PERSONAL PENSION PLANS, PERSONAL PENSIONS, POLICYHOLDERS, PORTFOLIO, PRIVATE PILLAR, PROFIT SHARING, PRUDENTIAL REGULATION, PUBLIC PENSION, PUBLIC PILLAR, PUBLIC PILLARS, RATE OF RETURN, RATES OF INTEREST, RATES OF RETURN, REGULAR PAYMENTS, REGULATORY AGENCIES, REGULATORY AUTHORITIES, REGULATORY AUTHORITY, REGULATORY FRAMEWORK, REGULATORY SYSTEMS, REINSURANCE, RESERVE, RESERVES, RETIREES, RETIREMENT, RETIREMENT ASSET, RETIREMENT INCOME, RETIREMENT PRODUCTS, RETIREMENT SAVING, RETIREMENT SAVINGS, RETIREMENT SAVINGS PLANS, RETIRING WORKERS, RETURNS, RETURNS ON EQUITIES, RISK EXPOSURE, RISK MANAGEMENT, RISK PREMIUM, RISK PROFILES, SAVINGS, SECURITIES, SECURITIES MARKETS, SHAREHOLDERS, SOLVENCY, SUPERVISORY FRAMEWORK, SUPPLEMENTARY PENSION, SURVIVAL BIAS, TAX, TAX ADVANTAGES, TRANSFER FEES, TRANSPARENCY, UNISEX TABLES, USE OF DERIVATIVES, VALUATION, VALUATIONS, VARIABLE ANNUITIES, 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_20110816141944 https://hdl.handle.net/10986/3524
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