The Mechanics and Regulation of Variable Payout Annuities

This paper discusses the mechanics and regulation of participating and unit-linked variable payout annuities. These annuities offer benefits that are not fixed in either nominal or real terms but depend on the performance of the fund or funds in wh...

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Main Author:	Vittas, Dimitri
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCOUNTING ACCOUNTING STANDARDS ACCUMULATED SAVINGS ACTIVE MARKETS ACTUARIES ADVERSE SELECTION AFFILIATED ORGANIZATIONS AGENTS ANNUAL RETURNS ANNUITY ANNUITY FACTOR ANNUITY MARKET ANNUITY MARKETS ANNUITY PAYMENTS ANNUITY PROVIDERS ASSET MANAGEMENT ASSET MANAGERS ASSET PORTFOLIOS ASSET PRICES ASSETS BANKRUPTCY BANKRUPTCY RISK BASIC PENSION BENEFIT PAYMENTS BEQUEST BEQUESTS BOND BOND MARKETS BROKER BROKERS CAPITAL REQUIREMENTS COMMISSIONS CONFLICTS OF INTEREST CONSUMER PROTECTION CONSUMERS CORPORATE BONDS COST OF CAPITAL DEVELOPING COUNTRIES DISCLOSURE DISCOUNT RATE DISCOUNT RATES EQUITIES EQUITY CAPITAL EQUITY MARKETS EQUITY RETURNS EQUITY RISK PREMIUM FAIR VALUE FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL PERFORMANCE FINANCIAL RISKS FINANCIAL SECTOR DEVELOPMENT FIXED ANNUITIES FIXED INCOME FIXED LIABILITIES FUNDED COMPONENT FUNDED PENSION FUTURE MORTALITY IMPROVEMENTS FUTURE PAYMENTS GOVERNMENT BONDS GOVERNMENT GUARANTEES GOVERNMENT REGULATION GUARANTEED BENEFIT GUARANTEED BENEFITS GUARANTEED PERIODS GUARANTEED RATES HEALTH STATUS INCOME BONDS INCOME SECURITY INDEXED ANNUITIES INDIVIDUAL ACCOUNTS INDIVIDUAL INVESTORS INFLATION INFLATION RISK INFLATION RISKS INFORMED DECISIONS INSURANCE INSURANCE COMPANIES INSURANCE MARKETS INTEGRITY INTEREST RATE INTEREST RATE SWAPS INTEREST RATES INTERNATIONAL BANK INVESTING INVESTMENT FUND INVESTMENT FUNDS INVESTMENT INCOME INVESTMENT OBJECTIVE INVESTMENT PERFORMANCE INVESTMENT PRODUCTS INVESTMENT RATE INVESTMENT RETURN INVESTMENT RETURNS INVESTMENT RISK INVESTMENT RISKS INVESTMENT STRATEGY LABOR MARKET LACK OF TRANSPARENCY LEVEL OF RISK LIABILITY LIFE ANNUITIES LIFE EXPECTANCY LIFE INSURANCE LIFE INSURANCE POLICIES LIQUIDITY LOCAL MARKETS LONG-TERM CARE LONG-TERM INVESTMENTS LONGEVITY ADJUSTMENT LONGEVITY INSURANCE LONGEVITY RISK LONGEVITY RISKS LOW INFLATION MARKET COMPETITION MARKET CONCENTRATION MARKET LEVELS MARKET PRACTITIONERS MARKET PRICES MARKET REGULATORS MARKET RETURNS MARKET SHARE MARKET STRUCTURE MARKET TRANSPARENCY MARKET VALUES MATURITY MINIMUM BENEFITS MORTALITY MORTALITY TABLE MORTALITY TABLES MORTGAGE MORTGAGE BONDS MUTUAL INSURANCE COMPANIES OCCUPATIONAL SCHEME OLDER PERSONS PAYOUT PENSION PENSION BENEFITS PENSION FUNDS PENSION SCHEME PENSION SCHEMES PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PERSONAL PENSION PERSONAL PENSION PLANS PERSONAL PENSIONS POLICYHOLDERS PORTFOLIO PRIVATE PILLAR PROFIT SHARING PRUDENTIAL REGULATION PUBLIC PENSION PUBLIC PILLAR PUBLIC PILLARS RATE OF RETURN RATES OF INTEREST RATES OF RETURN REGULAR PAYMENTS REGULATORY AGENCIES REGULATORY AUTHORITIES REGULATORY AUTHORITY REGULATORY FRAMEWORK REGULATORY SYSTEMS REINSURANCE RESERVE RESERVES RETIREES RETIREMENT RETIREMENT ASSET RETIREMENT INCOME RETIREMENT PRODUCTS RETIREMENT SAVING RETIREMENT SAVINGS RETIREMENT SAVINGS PLANS RETIRING WORKERS RETURNS RETURNS ON EQUITIES RISK EXPOSURE RISK MANAGEMENT RISK PREMIUM RISK PROFILES SAVINGS SECURITIES SECURITIES MARKETS SHAREHOLDERS SOLVENCY SUPERVISORY FRAMEWORK SUPPLEMENTARY PENSION SURVIVAL BIAS TAX TAX ADVANTAGES TRANSFER FEES TRANSPARENCY UNISEX TABLES USE OF DERIVATIVES VALUATION VALUATIONS VARIABLE ANNUITIES WITHDRAWAL YIELD CURVE
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110816141944 http://hdl.handle.net/10986/3524

id	okr-10986-3524
recordtype	oai_dc
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTING ACCOUNTING STANDARDS ACCUMULATED SAVINGS ACTIVE MARKETS ACTUARIES ADVERSE SELECTION AFFILIATED ORGANIZATIONS AGENTS ANNUAL RETURNS ANNUITY ANNUITY FACTOR ANNUITY MARKET ANNUITY MARKETS ANNUITY PAYMENTS ANNUITY PROVIDERS ASSET MANAGEMENT ASSET MANAGERS ASSET PORTFOLIOS ASSET PRICES ASSETS BANKRUPTCY BANKRUPTCY RISK BASIC PENSION BENEFIT PAYMENTS BEQUEST BEQUESTS BOND BOND MARKETS BROKER BROKERS CAPITAL REQUIREMENTS COMMISSIONS CONFLICTS OF INTEREST CONSUMER PROTECTION CONSUMERS CORPORATE BONDS COST OF CAPITAL DEVELOPING COUNTRIES DISCLOSURE DISCOUNT RATE DISCOUNT RATES EQUITIES EQUITY CAPITAL EQUITY MARKETS EQUITY RETURNS EQUITY RISK PREMIUM FAIR VALUE FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL PERFORMANCE FINANCIAL RISKS FINANCIAL SECTOR DEVELOPMENT FIXED ANNUITIES FIXED INCOME FIXED LIABILITIES FUNDED COMPONENT FUNDED PENSION FUTURE MORTALITY IMPROVEMENTS FUTURE PAYMENTS GOVERNMENT BONDS GOVERNMENT GUARANTEES GOVERNMENT REGULATION GUARANTEED BENEFIT GUARANTEED BENEFITS GUARANTEED PERIODS GUARANTEED RATES HEALTH STATUS INCOME BONDS INCOME SECURITY INDEXED ANNUITIES INDIVIDUAL ACCOUNTS INDIVIDUAL INVESTORS INFLATION INFLATION RISK INFLATION RISKS INFORMED DECISIONS INSURANCE INSURANCE COMPANIES INSURANCE MARKETS INTEGRITY INTEREST RATE INTEREST RATE SWAPS INTEREST RATES INTERNATIONAL BANK INVESTING INVESTMENT FUND INVESTMENT FUNDS INVESTMENT INCOME INVESTMENT OBJECTIVE INVESTMENT PERFORMANCE INVESTMENT PRODUCTS INVESTMENT RATE INVESTMENT RETURN INVESTMENT RETURNS INVESTMENT RISK INVESTMENT RISKS INVESTMENT STRATEGY LABOR MARKET LACK OF TRANSPARENCY LEVEL OF RISK LIABILITY LIFE ANNUITIES LIFE EXPECTANCY LIFE INSURANCE LIFE INSURANCE POLICIES LIQUIDITY LOCAL MARKETS LONG-TERM CARE LONG-TERM INVESTMENTS LONGEVITY ADJUSTMENT LONGEVITY INSURANCE LONGEVITY RISK LONGEVITY RISKS LOW INFLATION MARKET COMPETITION MARKET CONCENTRATION MARKET LEVELS MARKET PRACTITIONERS MARKET PRICES MARKET REGULATORS MARKET RETURNS MARKET SHARE MARKET STRUCTURE MARKET TRANSPARENCY MARKET VALUES MATURITY MINIMUM BENEFITS MORTALITY MORTALITY TABLE MORTALITY TABLES MORTGAGE MORTGAGE BONDS MUTUAL INSURANCE COMPANIES OCCUPATIONAL SCHEME OLDER PERSONS PAYOUT PENSION PENSION BENEFITS PENSION FUNDS PENSION SCHEME PENSION SCHEMES PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PERSONAL PENSION PERSONAL PENSION PLANS PERSONAL PENSIONS POLICYHOLDERS PORTFOLIO PRIVATE PILLAR PROFIT SHARING PRUDENTIAL REGULATION PUBLIC PENSION PUBLIC PILLAR PUBLIC PILLARS RATE OF RETURN RATES OF INTEREST RATES OF RETURN REGULAR PAYMENTS REGULATORY AGENCIES REGULATORY AUTHORITIES REGULATORY AUTHORITY REGULATORY FRAMEWORK REGULATORY SYSTEMS REINSURANCE RESERVE RESERVES RETIREES RETIREMENT RETIREMENT ASSET RETIREMENT INCOME RETIREMENT PRODUCTS RETIREMENT SAVING RETIREMENT SAVINGS RETIREMENT SAVINGS PLANS RETIRING WORKERS RETURNS RETURNS ON EQUITIES RISK EXPOSURE RISK MANAGEMENT RISK PREMIUM RISK PROFILES SAVINGS SECURITIES SECURITIES MARKETS SHAREHOLDERS SOLVENCY SUPERVISORY FRAMEWORK SUPPLEMENTARY PENSION SURVIVAL BIAS TAX TAX ADVANTAGES TRANSFER FEES TRANSPARENCY UNISEX TABLES USE OF DERIVATIVES VALUATION VALUATIONS VARIABLE ANNUITIES WITHDRAWAL YIELD CURVE
spellingShingle	ACCOUNTING ACCOUNTING STANDARDS ACCUMULATED SAVINGS ACTIVE MARKETS ACTUARIES ADVERSE SELECTION AFFILIATED ORGANIZATIONS AGENTS ANNUAL RETURNS ANNUITY ANNUITY FACTOR ANNUITY MARKET ANNUITY MARKETS ANNUITY PAYMENTS ANNUITY PROVIDERS ASSET MANAGEMENT ASSET MANAGERS ASSET PORTFOLIOS ASSET PRICES ASSETS BANKRUPTCY BANKRUPTCY RISK BASIC PENSION BENEFIT PAYMENTS BEQUEST BEQUESTS BOND BOND MARKETS BROKER BROKERS CAPITAL REQUIREMENTS COMMISSIONS CONFLICTS OF INTEREST CONSUMER PROTECTION CONSUMERS CORPORATE BONDS COST OF CAPITAL DEVELOPING COUNTRIES DISCLOSURE DISCOUNT RATE DISCOUNT RATES EQUITIES EQUITY CAPITAL EQUITY MARKETS EQUITY RETURNS EQUITY RISK PREMIUM FAIR VALUE FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL PERFORMANCE FINANCIAL RISKS FINANCIAL SECTOR DEVELOPMENT FIXED ANNUITIES FIXED INCOME FIXED LIABILITIES FUNDED COMPONENT FUNDED PENSION FUTURE MORTALITY IMPROVEMENTS FUTURE PAYMENTS GOVERNMENT BONDS GOVERNMENT GUARANTEES GOVERNMENT REGULATION GUARANTEED BENEFIT GUARANTEED BENEFITS GUARANTEED PERIODS GUARANTEED RATES HEALTH STATUS INCOME BONDS INCOME SECURITY INDEXED ANNUITIES INDIVIDUAL ACCOUNTS INDIVIDUAL INVESTORS INFLATION INFLATION RISK INFLATION RISKS INFORMED DECISIONS INSURANCE INSURANCE COMPANIES INSURANCE MARKETS INTEGRITY INTEREST RATE INTEREST RATE SWAPS INTEREST RATES INTERNATIONAL BANK INVESTING INVESTMENT FUND INVESTMENT FUNDS INVESTMENT INCOME INVESTMENT OBJECTIVE INVESTMENT PERFORMANCE INVESTMENT PRODUCTS INVESTMENT RATE INVESTMENT RETURN INVESTMENT RETURNS INVESTMENT RISK INVESTMENT RISKS INVESTMENT STRATEGY LABOR MARKET LACK OF TRANSPARENCY LEVEL OF RISK LIABILITY LIFE ANNUITIES LIFE EXPECTANCY LIFE INSURANCE LIFE INSURANCE POLICIES LIQUIDITY LOCAL MARKETS LONG-TERM CARE LONG-TERM INVESTMENTS LONGEVITY ADJUSTMENT LONGEVITY INSURANCE LONGEVITY RISK LONGEVITY RISKS LOW INFLATION MARKET COMPETITION MARKET CONCENTRATION MARKET LEVELS MARKET PRACTITIONERS MARKET PRICES MARKET REGULATORS MARKET RETURNS MARKET SHARE MARKET STRUCTURE MARKET TRANSPARENCY MARKET VALUES MATURITY MINIMUM BENEFITS MORTALITY MORTALITY TABLE MORTALITY TABLES MORTGAGE MORTGAGE BONDS MUTUAL INSURANCE COMPANIES OCCUPATIONAL SCHEME OLDER PERSONS PAYOUT PENSION PENSION BENEFITS PENSION FUNDS PENSION SCHEME PENSION SCHEMES PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PERSONAL PENSION PERSONAL PENSION PLANS PERSONAL PENSIONS POLICYHOLDERS PORTFOLIO PRIVATE PILLAR PROFIT SHARING PRUDENTIAL REGULATION PUBLIC PENSION PUBLIC PILLAR PUBLIC PILLARS RATE OF RETURN RATES OF INTEREST RATES OF RETURN REGULAR PAYMENTS REGULATORY AGENCIES REGULATORY AUTHORITIES REGULATORY AUTHORITY REGULATORY FRAMEWORK REGULATORY SYSTEMS REINSURANCE RESERVE RESERVES RETIREES RETIREMENT RETIREMENT ASSET RETIREMENT INCOME RETIREMENT PRODUCTS RETIREMENT SAVING RETIREMENT SAVINGS RETIREMENT SAVINGS PLANS RETIRING WORKERS RETURNS RETURNS ON EQUITIES RISK EXPOSURE RISK MANAGEMENT RISK PREMIUM RISK PROFILES SAVINGS SECURITIES SECURITIES MARKETS SHAREHOLDERS SOLVENCY SUPERVISORY FRAMEWORK SUPPLEMENTARY PENSION SURVIVAL BIAS TAX TAX ADVANTAGES TRANSFER FEES TRANSPARENCY UNISEX TABLES USE OF DERIVATIVES VALUATION VALUATIONS VARIABLE ANNUITIES WITHDRAWAL YIELD CURVE Vittas, Dimitri The Mechanics and Regulation of Variable Payout Annuities
geographic_facet	The World Region The World Region
relation	Policy Research working paper ; no. WPS 5762
description	This paper discusses the mechanics and regulation of participating and unit-linked variable payout annuities. These annuities offer benefits that are not fixed in either nominal or real terms but depend on the performance of the fund or funds in which the underlying reserve assets are invested, their profit sharing features, and the treatment of longevity risk. The paper focuses on the treatment of investment and longevity risks by different types of these annuities and underscores the challenge of establishing a robust and effective framework of regulation and supervision for these products. The paper also addresses the exposure of annuitants to integrity risk and places special emphasis on the need for a high level of meaningful transparency.
format	Publications & Research :: Policy Research Working Paper
author	Vittas, Dimitri
author_facet	Vittas, Dimitri
author_sort	Vittas, Dimitri
title	The Mechanics and Regulation of Variable Payout Annuities
title_short	The Mechanics and Regulation of Variable Payout Annuities
title_full	The Mechanics and Regulation of Variable Payout Annuities
title_fullStr	The Mechanics and Regulation of Variable Payout Annuities
title_full_unstemmed	The Mechanics and Regulation of Variable Payout Annuities
title_sort	mechanics and regulation of variable payout annuities
publishDate	2012
url	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110816141944 http://hdl.handle.net/10986/3524
_version_	1764387141436047360
spelling	okr-10986-35242021-04-23T14:02:10Z The Mechanics and Regulation of Variable Payout Annuities Vittas, Dimitri ACCOUNTING ACCOUNTING STANDARDS ACCUMULATED SAVINGS ACTIVE MARKETS ACTUARIES ADVERSE SELECTION AFFILIATED ORGANIZATIONS AGENTS ANNUAL RETURNS ANNUITY ANNUITY FACTOR ANNUITY MARKET ANNUITY MARKETS ANNUITY PAYMENTS ANNUITY PROVIDERS ASSET MANAGEMENT ASSET MANAGERS ASSET PORTFOLIOS ASSET PRICES ASSETS BANKRUPTCY BANKRUPTCY RISK BASIC PENSION BENEFIT PAYMENTS BEQUEST BEQUESTS BOND BOND MARKETS BROKER BROKERS CAPITAL REQUIREMENTS COMMISSIONS CONFLICTS OF INTEREST CONSUMER PROTECTION CONSUMERS CORPORATE BONDS COST OF CAPITAL DEVELOPING COUNTRIES DISCLOSURE DISCOUNT RATE DISCOUNT RATES EQUITIES EQUITY CAPITAL EQUITY MARKETS EQUITY RETURNS EQUITY RISK PREMIUM FAIR VALUE FINANCIAL MANAGEMENT FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL PERFORMANCE FINANCIAL RISKS FINANCIAL SECTOR DEVELOPMENT FIXED ANNUITIES FIXED INCOME FIXED LIABILITIES FUNDED COMPONENT FUNDED PENSION FUTURE MORTALITY IMPROVEMENTS FUTURE PAYMENTS GOVERNMENT BONDS GOVERNMENT GUARANTEES GOVERNMENT REGULATION GUARANTEED BENEFIT GUARANTEED BENEFITS GUARANTEED PERIODS GUARANTEED RATES HEALTH STATUS INCOME BONDS INCOME SECURITY INDEXED ANNUITIES INDIVIDUAL ACCOUNTS INDIVIDUAL INVESTORS INFLATION INFLATION RISK INFLATION RISKS INFORMED DECISIONS INSURANCE INSURANCE COMPANIES INSURANCE MARKETS INTEGRITY INTEREST RATE INTEREST RATE SWAPS INTEREST RATES INTERNATIONAL BANK INVESTING INVESTMENT FUND INVESTMENT FUNDS INVESTMENT INCOME INVESTMENT OBJECTIVE INVESTMENT PERFORMANCE INVESTMENT PRODUCTS INVESTMENT RATE INVESTMENT RETURN INVESTMENT RETURNS INVESTMENT RISK INVESTMENT RISKS INVESTMENT STRATEGY LABOR MARKET LACK OF TRANSPARENCY LEVEL OF RISK LIABILITY LIFE ANNUITIES LIFE EXPECTANCY LIFE INSURANCE LIFE INSURANCE POLICIES LIQUIDITY LOCAL MARKETS LONG-TERM CARE LONG-TERM INVESTMENTS LONGEVITY ADJUSTMENT LONGEVITY INSURANCE LONGEVITY RISK LONGEVITY RISKS LOW INFLATION MARKET COMPETITION MARKET CONCENTRATION MARKET LEVELS MARKET PRACTITIONERS MARKET PRICES MARKET REGULATORS MARKET RETURNS MARKET SHARE MARKET STRUCTURE MARKET TRANSPARENCY MARKET VALUES MATURITY MINIMUM BENEFITS MORTALITY MORTALITY TABLE MORTALITY TABLES MORTGAGE MORTGAGE BONDS MUTUAL INSURANCE COMPANIES OCCUPATIONAL SCHEME OLDER PERSONS PAYOUT PENSION PENSION BENEFITS PENSION FUNDS PENSION SCHEME PENSION SCHEMES PENSION SYSTEM PENSION SYSTEMS PENSIONERS PENSIONS PERSONAL PENSION PERSONAL PENSION PLANS PERSONAL PENSIONS POLICYHOLDERS PORTFOLIO PRIVATE PILLAR PROFIT SHARING PRUDENTIAL REGULATION PUBLIC PENSION PUBLIC PILLAR PUBLIC PILLARS RATE OF RETURN RATES OF INTEREST RATES OF RETURN REGULAR PAYMENTS REGULATORY AGENCIES REGULATORY AUTHORITIES REGULATORY AUTHORITY REGULATORY FRAMEWORK REGULATORY SYSTEMS REINSURANCE RESERVE RESERVES RETIREES RETIREMENT RETIREMENT ASSET RETIREMENT INCOME RETIREMENT PRODUCTS RETIREMENT SAVING RETIREMENT SAVINGS RETIREMENT SAVINGS PLANS RETIRING WORKERS RETURNS RETURNS ON EQUITIES RISK EXPOSURE RISK MANAGEMENT RISK PREMIUM RISK PROFILES SAVINGS SECURITIES SECURITIES MARKETS SHAREHOLDERS SOLVENCY SUPERVISORY FRAMEWORK SUPPLEMENTARY PENSION SURVIVAL BIAS TAX TAX ADVANTAGES TRANSFER FEES TRANSPARENCY UNISEX TABLES USE OF DERIVATIVES VALUATION VALUATIONS VARIABLE ANNUITIES WITHDRAWAL YIELD CURVE This paper discusses the mechanics and regulation of participating and unit-linked variable payout annuities. These annuities offer benefits that are not fixed in either nominal or real terms but depend on the performance of the fund or funds in which the underlying reserve assets are invested, their profit sharing features, and the treatment of longevity risk. The paper focuses on the treatment of investment and longevity risks by different types of these annuities and underscores the challenge of establishing a robust and effective framework of regulation and supervision for these products. The paper also addresses the exposure of annuitants to integrity risk and places special emphasis on the need for a high level of meaningful transparency. 2012-03-19T18:04:00Z 2012-03-19T18:04:00Z 2011-08-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110816141944 http://hdl.handle.net/10986/3524 English Policy Research working paper ; no. WPS 5762 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region

The Mechanics and Regulation of Variable Payout Annuities

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