Self-insurance Against Natural Disasters: The Use of Pension Funds in Pacific Island Countries
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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. 2018/155
Subject:
Consumption Environment Expenditure Labor National accounts Natural disasters Pension spending Pensions Retirement
English
Publication Date:
July 6, 2018
ISBN/ISSN:
9781484366837/1018-5941
Stock No:
WPIEA2018155
Pages:
22
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