A New Korean Defined Contribution Plan Framework to Enhance Retirement Income Security: Combining Lifecycle Funds with Compulsory Annuitisation
In this paper, the intension is to construct a new Korean defined contribution operation structure that better meets retirement income security by integrating accumulation and payout phases. For this, two approaches are compared: a lump sum withdrawal programme supported by a principal preservation fund (i.e. current approach), and the combination of compulsory annuitisation with lifecycle funds (i.e. alternative approach). We set benchmark incomes, annuity incomes from the immediate life annuity policy, purchasable at retirement with the accumulated assets of lifecycle funds. The above two approaches are then assessed in terms of the probability of shortfall employed here to measure the longevity risk, at a Value-at-Risk of 50, 75 and 95 per cent, respectively. Consequently, it is shown that the alternative approach provides better retirement income security than the current approach.
Volume (Year): 35 (2010)
Issue (Month): S1 (December)
|Contact details of provider:|| Web page: http://www.palgrave-journals.com/|
|Order Information:|| Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK|
Web: http://www.palgrave-journals.com/pal/subscribe/index.html Email:
When requesting a correction, please mention this item's handle: RePEc:pal:gpprii:v:35:y:2010:i:1s:p:s50-s67. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Daniel Foley)
If references are entirely missing, you can add them using this form.