Retirement Annuity Design in an Inflationary Climate
This paper examines the tilt and risk-return characteristics of real retirement incomes provided by variable annuities tied to bills, long-term bonds, stocks and a mixed portfolio which combines all three. The analysis emphasizes the riskiness of the real value of benefits provided by conventional nominal annuities. The Rockefeller Foundation Plan, together with the "ad hoc" cost-of-living adjustments made by many large firms, are interpreted as representative market responses to increased inflation uncertainty. The paper examines the annuity designs implicit in these innovations, and shows them to be variants of the standard variable annuity.
|Date of creation:||May 1982|
|Date of revision:|
|Publication status:||published as Bodie, Zvi and James E. Pesando. "Retirement Annuity Design in an Inflationary Climate." Financial Aspects of the U.S. Pension System, edited by Zvi Bodie and John B. Shoven. Chicago: University of Chicago Press, (1983), pp . 291-324 and 322-323.|
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- Martin Feldstein, 1978.
"Inflation and the Stock Market,"
NBER Working Papers
0276, National Bureau of Economic Research, Inc.
- Martin Feldstein, 1983. "Inflation and the Stock Market," NBER Chapters, in: Inflation, Tax Rules, and Capital Formation, pages 186-198 National Bureau of Economic Research, Inc.
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- James E. Pesando, 1981.
"Employee Valuation of Pension Claims and the Impact of Indexing Initiatives,"
NBER Working Papers
0767, National Bureau of Economic Research, Inc.
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- Bodie, Zvi, 1976. "Common Stocks as a Hedge against Inflation," Journal of Finance, American Finance Association, vol. 31(2), pages 459-70, May.
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