Can the Private Annuity Market Provide Secure Retirement Income?

By Allison C Schrager, George A Mackenzie

December 1, 2004

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Format: Chicago

Allison C Schrager, and George A Mackenzie. Can the Private Annuity Market Provide Secure Retirement Income?, (USA: International Monetary Fund, 2004) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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.

Subject: Financial institutions, Financial services, Insurance, Insurance companies, Labor, National accounts, Pensions, Personal income, Yield curve

Keywords: Annuities, Annuity, Annuity diversification, Annuity literature, Annuity market, Annuity payment, Annuity premium, Annuity provider, Europe, Individual accounts, Insurance, Insurance companies, Market result, Pensions, Personal income, Public pension systems, Staggered annuity purchase, WP, Yield curve

Publication Details

Pages:

20
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/230
Stock No:

WPIEA2302004
ISBN:

9781451875539
ISSN:

1018-5941

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