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A Redistributive GSA Scheme to Cope With Socio-Economic Mortality Differentials

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Listed:
  • Maria Aragona
  • Luca Regis
  • Elena Vigna

Abstract

Longevity risk is threatening the sustainability of traditional pension sys tems. To deal with this issue, decumulation strategies alternative to annuities have been proposed in the literature. However, heterogeneity in mortality experiences in the pool of policyholders due to socio-economic classes gen erates inequity, because of implicit wealth transfers from the more disadvan taged to the wealthier classes. We address this issue in a GSA (Group Self Annuitization) scheme in the presence of stochastic mortality by propos ing a redistributive GSA scheme where benefits are optimally shared across classes. The expected present values of the benefits in a standard GSA scheme show relevant gaps across socio-economic groups, which are re duced in the redistributive GSA Scheme. We explore sensitivity to pool size and interest rates.

Suggested Citation

  • Maria Aragona & Luca Regis & Elena Vigna, 2024. "A Redistributive GSA Scheme to Cope With Socio-Economic Mortality Differentials," Carlo Alberto Notebooks 732 JEL Classification: C, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:732
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    References listed on IDEAS

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    Keywords

    group self-annuitization; mortality differentials; socio-economic classes; stochastic mortality; redistribution.;
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