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How do unisex life care annuities embedded in a pay-as-you-go retirement system affect gender redistribution?

Author

Listed:
  • Javier Pla-Porcel

    (Actuarial Department, SOS Seguros y Reaseguros, S.A., Madrid. (Spain).)

  • Manuel Ventura-Marco

    (Department of Financial Economics and Actuarial Science, University of Valencia, Spain.)

  • Carlos Vidal-Meliá

    (Department of Financial Economics and Actuarial Science, University of Valencia, Spain, and Instituto Complutense de Análisis Económico, Complutense University of Madrid, Spain.)

Abstract

This paper aims to assess gender redistribution when using unisex conversion factors to compute the initial benefit of life care annuities (LCAs) embedded in a pay-as-you-go (PAYG) pension system. We use a method based on actuarial factors to disentangle the hidden redistribution of LCAs with graded benefits. The value of the actuarial factor relies on a multistate framework in which transitions are modeled from the initial health state to the absorbing state. According to our calculations for Australia and the US, the amount of gender redistribution is by no means irrelevant. In spite of the very different biometric data, the results are surprisingly similar for both countries. Risk equalization based on the “equal treatment” of men and women may not be fair, given that age, gender and health state are very significant risk factors in computing the initial benefit in a system covering retirement and long-term care.

Suggested Citation

  • Javier Pla-Porcel & Manuel Ventura-Marco & Carlos Vidal-Meliá, 2017. "How do unisex life care annuities embedded in a pay-as-you-go retirement system affect gender redistribution?," Documentos de Trabajo del ICAE 2017-11, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
  • Handle: RePEc:ucm:doicae:1711
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    References listed on IDEAS

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    More about this item

    Keywords

    Gender; Life Care Annuities; Long-Term Care Insurance; Multistate model; Redistribution; Retirement.;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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