Designing the Payout Phase of Pension Systems : Policy Issues, Constraints and Options

This paper examines the policy issues, constraints and options facing policymakers in promoting the development of sound markets for retirement products. It discusses the various risks faced by pensioners and the risk characteristics of alternative...

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Bibliographic Details
Main Authors:	Rocha, Roberto, Vittas, Dimitri
Format:	Policy Research Working Paper
Language:	English
Published:	2012
Subjects:	ACCOUNT HOLDER ACCOUNTING ADVERSE SELECTION AMOUNT OF CAPITAL ANNUITY PROVIDERS ASSET MANAGEMENT ASSET PORTFOLIO ASSET PORTFOLIOS BANKRUPTCY BANKRUPTCY RISK BANKRUPTCY RISKS BENEFICIARIES BENEFIT PAYMENT BEQUEST BEQUESTS BOND BOND FUTURES BOND YIELD BOND YIELD CURVES BROKERS CAPITAL LOSS CAPITAL MARKETS DEVELOPMENT CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITALIZATION CASH OUTFLOWS COMPETITIVE MARKET CONFLICTS OF INTEREST CONSUMER PROTECTION CORPORATE BONDS CREDIT DEFAULT CREDIT DEFAULT SWAPS CREDIT DERIVATIVES CREDIT QUALITY CREDIT RATING CREDIT RISK CREDIT RISKS CREDITWORTHINESS CURRENCY CURRENCY DEPRECIATION CURRENCY RISK CUSTODY DEBT INSTRUMENTS DEFERMENT PERIOD DEFERRED ANNUITIES DEFINED-CONTRIBUTION PENSION DEPOSIT DEPOSIT INSURANCE DERIVATIVE DERIVATIVE INSTRUMENTS DERIVATIVE PRODUCTS DERIVATIVES DEVALUATIONS DEVELOPING COUNTRIES DISCOUNT RATES DOMESTIC CURRENCY EQUITY INVESTMENTS EQUITY RETURNS EXCHANGE RATES EXPENDITURES FAIR VALUE FINANCIAL CRISIS FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL MANAGEMENT FINANCIAL MARKETS FINANCIAL RISK FINANCIAL WEAKNESS FIXED ANNUITIES FIXED INTEREST FRAUD FUTURE INCOME GLOBAL CAPITAL GLOBAL CAPITAL MARKETS GLOBAL MARKETS GOVERNMENT BONDS GOVERNMENT BUDGETS GOVERNMENT GUARANTEE GOVERNMENT GUARANTEES GOVERNMENT SUPPORT GUARANTEED BENEFITS GUARANTEED PERIODS IMMUNIZATION INCOME GROWTH INCOME SECURITY INCOME TAX INDEXED BONDS INFLATION INFLATION RATE INFLATION RISK INFLATION RISKS INSURANCE INSURANCE COMPANIES INSURANCE COMPANY INSURANCE MARKET INSURANCE MARKETS INSURANCE PREMIUMS INTEREST RATE INTEREST RATE RISK INTEREST RATE SWAPS INTERNATIONAL BANK INVESTING INVESTMENT FUNDS INVESTMENT POLICIES INVESTMENT PORTFOLIOS INVESTMENT RISK INVESTMENT RISKS INVESTMENTS IN EQUITIES ISSUERS OF DEBT LEVEL OF RISK LIABILITY LIFE ANNUITIES LIFE EXPECTANCY LIFE INSURANCE LIFE INSURANCE COMPANIES LIFE INSURANCE POLICIES LIQUID ASSETS LIQUIDITY LIQUIDITY MANAGEMENT LIQUIDITY PREMIUM LIQUIDITY RISK LIQUIDITY RISKS LIVING STANDARD LOAN LOCAL MARKET LONG-TERM ASSETS LONG-TERM DEBT LONG-TERM INTEREST LONG-TERM INTEREST RATE LONG-TERM INTEREST RATES LONG-TERM LIABILITIES LONGEVITY RISK MARKET DISCIPLINE MARKET FAILURE MARKET INTEREST RATES MARKET PRICES MARKET SHARE MARKET STRUCTURE MATURITY MONEY MARKET MONEY MARKET INSTRUMENTS MORAL HAZARD MORTALITY MORTGAGE MORTGAGE BOND MORTGAGE BONDS MORTGAGES MUTUAL FUNDS NOMINAL YIELD NORMAL RETIREMENT AGE PAYMENT OBLIGATION PENSION PENSION BENEFIT PENSION FUNDS PENSION REFORMS PENSION SYSTEM PENSION SYSTEMS PENSIONER PENSIONERS PENSIONS PILLAR BENEFITS PORTFOLIO PORTFOLIOS PREPAYMENT PREPAYMENT RISK PREPAYMENT RISKS PRIVATE PENSION PRIVATE PENSION SYSTEMS PROFIT MARGINS PRUDENTIAL REGULATION PUBLIC PENSION PURCHASING POWER QUOTATION SYSTEM QUOTATION SYSTEMS RATE OF RETURN RATES OF RETURN REGULAR PAYMENTS REGULATORY AUTHORITIES REGULATORY FRAMEWORK REINVESTMENT REINVESTMENT RATES REINVESTMENT RISK REPLACEMENT RATE REPLACEMENT RATES RESERVE RESERVES RETIREMENT RETIREMENT PRODUCT RETIREMENT PRODUCTS RETIREMENT SAVINGS RETIRING WORKERS RETURN RETURNS RETURNS ON EQUITIES RISK CAPITAL RISK EXPOSURE RISK MANAGEMENT RISK MANAGEMENT SYSTEMS RISK OF DEFAULT RISK POOLING RISK PREMIUMS RISK SHARING SAFETY NET SAVINGS ACCOUNTS SECURITIES SECURITIES TRANSACTIONS SETTLEMENT SETTLEMENT DATES SETTLEMENT RISK SMALL BUSINESS SOCIAL SECURITY SOLVENCY TERM STRUCTURE OF INTEREST RATES TRADING TRANSPARENCY UNDERLYING ASSET UNDERLYING MORTGAGES USE OF DERIVATIVE VALUATIONS VARIABLE ANNUITIES VARIABLE ANNUITY 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_20100504092303 http://hdl.handle.net/10986/3776

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Summary:	This paper examines the policy issues, constraints and options facing policymakers in promoting the development of sound markets for retirement products. It discusses the various risks faced by pensioners and the risk characteristics of alternative retirement products and also reviews the risks faced by providers of retirement products and the management and regulatory challenges of dealing with these risks. The paper focuses on policies that could be adopted by developing and transitioning countries where financial and insurance markets are not well developed. It argues for promoting an adequate level of annuitization but avoiding excessive annuitization. It also argues for favoring combinations of payout options, covering different products at a particular point in time as well as different payout options over time. The paper also discusses the choice between centralized and decentralized markets and highlights the basic elements of an effective regulation of risk management.

Designing the Payout Phase of Pension Systems : Policy Issues, Constraints and Options

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