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Personal pensions with risk sharing

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  • BOVENBERG, LANS
  • NIJMAN, THEO

Abstract

To improve the design of the pay-out phase of DC plans, this paper proposes a new approach to structure pension products: the Personal Pension with Risk sharing (PPR). By unbundling and valuing the investment, (dis)saving, insurance and risk-sharing functions of pensions, PPRs allow risk management and (dis)saving to be customized to the specific features of heterogeneous individuals. Unlike variable annuities, PPRs allow investment risks to be combined with longevity insurance without giving rise to high year-on-year volatility in consumption streams or opaque and rigid valuation and smoothing rules. The synthesis of a PPR structure provides new opportunities for product innovation and for the comparison of retirement products.

Suggested Citation

  • Bovenberg, Lans & Nijman, Theo, 2017. "Personal pensions with risk sharing," Journal of Pension Economics and Finance, Cambridge University Press, vol. 16(4), pages 450-466, October.
    • Handle: RePEc:cup:jpenef:v:16:y:2017:i:04:p:450-466_00
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    Cited by:

    1. Syed Alamdar Ali Shah, 2019. "Integration Of Financial Risks With Non Financial Risks: An Exploratory Study From Pakistani Context," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 8(2), pages 49-65.
    2. Ruslana Pikus & Anna Khemii, 2018. "Life Insurance Under Reforming The Pension Insurance System," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(4).

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