Special-rate life annuities are annuity products whose single premium is based on a mortality assumption driven (at least to some extent) by the health status of applicant. The ascertained via an appropriate underwriting step (which explains alternative expression “underwritten annuities”). Better rates then applied in presence poor conditions. worse conditions, smaller modal age at death (as w...

Motivated by recent experiences in economies adopting the defined-contribution pension system, we study public annuities presence of survival probability heterogeneity. It is found that difference annuitization-weighted and unweighted averages probabilities a useful measure severity adverse selection. We then examine with guarantee feature which bundles annuity income bequeathable wealth compon...

Switzerland is one of the few countries with a relatively mature funded pension scheme. This paper offers a short description of the Swiss system, highlighting two specific areas for which previous experience is particularly valuable. Taking the Swiss example, firstly, it illustrates the importance of prudential regulation and adequate transparency standards. Secondly, the paper explores the im...

With the shift from defined benefit pensions to 401(k) plans, individuals are increasingly responsible not only for saving for retirement but also for drawing down their assets in retirement. These drawdown decisions require substantial cognitive effort and are very difficult for the average person. Yet most models of asset decumulation ignore the possibility that individuals may differ in thei...

Life annuities provide a guaranteed income for the remainder of the recipient’s lifetime, and therefore, annuitization presents an important option when choosing an adequate investment strategy for the retirement ages. While there are numerous research articles studying annuities from a pensioner’s point of view, thus far there have been few contributions considering annuities from the provider...

In previous writing – and related papers by Chen and Milevsky (JFP, 2003) or Ameriks, Veres and Warshawsky (JFP, 2001) – the point has been made that payout annuities, either variable or fixed, have a rightful place in the optimal life-cycle portfolio. I have argued that depending on a lifecycle investor’s bequest motive versus their desire for consumption, they should have a substantial portio...