Self-insurance Against Natural Disasters: The Use of Pension Funds in Pacific Island Countries

Author/Editor:

Si Guo ; Futoshi Narita

Publication Date:

July 6, 2018

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Pacific island countries are exposed to significant risks from natural disasters. As a disaster relief measure, Fiji allowed pre-retirement pension withdrawls in the wake of Cyclone Winston in 2016. Motivated by this policy action, we provide a normative analysis of the use of early pension withdrawals after disasters, by setting up a life-cycle saving model with myopic households facing large natural disaster shocks. The model demonstrates the key trade-off between building up sufficient retirement savings and ensuring the access to savings against natural disaster shocks, and sheds light on welfare implications of early pension withdrawals.

Series:

Working Paper No. 18/155

Subject:

English

Publication Date:

July 6, 2018

ISBN/ISSN:

9781484366837/1018-5941

Stock No:

WPIEA2018155

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

22

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