Annuities in (N)DC Pension Schemes : Design, Heterogeneity, and Estimation Issues
This paper identifies and discusses four issues in creating annuities in (nonfinancial) defined contribution (NDC) schemes that are essential for systems’ financial stability and fair inter or intragenerational redistribution. The first issue is th...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/521481556883024663/Annuities-in-N-DC-Pension-Schemes-Design-Heterogeneity-and-Estimation-Issues http://hdl.handle.net/10986/31640 |
| Summary: | This paper identifies and discusses four
issues in creating annuities in (nonfinancial) defined
contribution (NDC) schemes that are essential for systems’
financial stability and fair inter or intragenerational
redistribution. The first issue is the choice between
incorporating the rate of return into the annuity or into
the exogenous indexation. The second issue is in choosing a
projection method for life expectancy that produces
systematically unbiased estimates. The third issue is at
what age the projection of life expectancy is to be fixed
over the remaining lifetime of the annuity. The final issue
is the prevalence of socioeconomic heterogeneity within the
insurance pool. |
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