Can the Private Annuity Market Provide Secure Retirement Income?
Electronic Access:
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Summary:
Annuity premiums are often assumed to be constant, although they can be expected to vary with the yield curve. Variations in premiums will become an important public policy issue as defined-contribution (DC) pension plans play an increasingly prominent role in providing retirement income. As DC plan holders retire, many will annuitize at least a part of their account balances. In the absence of current data on annuity prices, the paper relies on U.S. Treasury interest rate data to simulate the impact of interest rate variation on annuity premiums. For a spectrum of feasible interest rates, the variation in retirement income is not negligible.
Series:
Working Paper No. 2004/230
Subject:
Financial institutions Financial services Insurance Insurance companies Labor National accounts Pensions Personal income Yield curve
English
Publication Date:
December 1, 2004
ISBN/ISSN:
9781451875539/1018-5941
Stock No:
WPIEA2302004
Pages:
20
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