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A conceptual framework for retirement products : Risk sharing arrangements between providers and retirees

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Author Info

  • Impavido, Gregorio
  • Thorburn, Craig
  • Wadsworth, Mike

Abstract

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.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3208.

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Date of creation: 01 Feb 2004
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Handle: RePEc:wbk:wbrwps:3208

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Related research

Keywords: Insurance&Risk Mitigation; Environmental Economics&Policies; Pensions&Retirement Systems; Economic Theory&Research; Non Bank Financial Institutions; Insurance&Risk Mitigation; Pensions&Retirement Systems; Economic Theory&Research; Environmental Economics&Policies; Non Bank Financial Institutions;

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Cited by:
  1. Robert Holzmann & Richard Hinz, 2005. "Old Age Income Support in the 21st century: An International Perspective on Pension Systems and Reform," World Bank Publications, The World Bank, number 7336, October.
  2. Blake, David & Cairns, Andrew & Dowd, Kevin, 2008. "Turning pension plans into pension planes: What investment strategy designers of defined contribution pension plans can learn from commercial aircraft designers," MPRA Paper 33749, University Library of Munich, Germany.
  3. Ian Tower & Gregorio Impavido, 2009. "How the Financial Crisis Affects Pensions and Insurance and Why the Impacts Matter," IMF Working Papers 09/151, International Monetary Fund.

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