By Edmund Cannon, Ian Tonks
The Pension trouble issues the altering demographic profile of extra aged and less kids within the financial system. realizing and tackling this approaching main issue is a key activity for public coverage. An annuity protects someone from outliving their rate reductions, and is relevant to pensions coverage. This booklet examines the different sorts of annuities on hand, how those annuities are priced, the background of annuities, how annuities markets functionality: how they paintings, and are they effective. It offers a global comparability of annuity markets, and examines fresh advancements in annuity markets.
Governments all over the world are transferring their pension guidelines clear of pay-as-you-go platforms in the direction of person reductions schemes. those mark downs must be switched over right into a pension at retirement, and annuity markets offer this functionality. This publication is a entire learn of annuity markets. The ebook begins by means of outlining the context of public coverage in the direction of pensions coverage. It then explains the different sorts of annuities on hand, concentrating on the U.S. and united kingdom, and the way those annuities are priced, reading pricing and booking tools from an actuarial point of view and in addition describing mortality dimension. the following chapters describe the background of annuities, and the adventure of annuity markets in international locations except the united kingdom and US. The ebook then outlines the speculation in the back of annuites, and explains how annuities insure shoppers opposed to sturdiness dangers. the subsequent bankruptcy describes how annuities markets functionality: how they paintings, and whether or not they are effective, top onto a dialogue of the annuity puzzle. The ebook concludes by way of discussing fresh advancements in annuity markets.
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The Pension main issue issues the altering demographic profile of extra aged and less kids within the economic climate. knowing and tackling this coming near near challenge is a key job for public coverage. An annuity protects someone from outliving their rate reductions, and is important to pensions coverage. This e-book examines the different sorts of annuities to be had, how those annuities are priced, the historical past of annuities, how annuities markets functionality: how they paintings, and are they effective.
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2 also shows, although France and Germany do not have large funded pension schemes, they have relatively large insurance and mutual fund sectors. It is important to recognize that individuals in different countries may be making their own provisions for their retirement through other savings vehicles. UCITS (Undertaking for Collective Investment in Transferable Securities) are important savings vehicles in France and Germany (Franks, Mayer, and da Silva 2003). The UK’s Pension Commission (2004) also discusses the use of housing wealth as a source of retirement income.
4. It is true that it is fairly straightforward to extend the model in Chapter 7, to include the possibility that the agent gains utility from bequeathing wealth to someone else. However, the guarantee period is a very clumsy and risky way of ensuring a bequest (since it is more likely than not that the annuitant will outlive the guarantee period). For this reason we hypothesize the motivation advanced in the text: that annuitants worry about dying early and hence earning a poor return on the annuity purchase ex post.
6. All of this evidence suggests that the demand for annuities in the UK will continue to rise substantially in the coming years, and therefore examining the functioning of the annuities market is relevant and timely for public policy, though the Pensions Commission notes that any capacity problems in the annuities market could be eased by allowing a relaxation of income drawdown rules, or by facilitating later retirement. 2. Structure of the book Having set the scene for the increasing importance of annuities markets, we now proceed to describe the structure of this book.