Publicação
Funding for longer lives
| Resumo: | Longevity increases and population ageing create challenges for all societal institutions, particularly those providing retirement income, health care, and long-term care services. At the individual level, an obvious question is how to ensure all retirees have an adequate, secure, stable and predictable lifelong income stream that will allow them to maintain a target standard of living for however long the individual lives. In this paper we introduce and discuss the concept of retirement wallet representing the multiple income and service sources individuals and their families will have to fund for longer lives. We then address the main decumulation risks and options, including the adoption of a given longevity insurance strategy, of a programmed withdrawal strategy and of an investment strategy. The main payout options available for allocating assets accumulated in pension plans are discussed, particularly the role of traditional and innovative investment and longevity risk-sharing structures. We provide illustrative results for the price of innovative participating longevity-linked life annuities (PLLAs) that link benefits to the dynamics of both a longevity index and an interest rate adjustment factor using Spanish mortality and financial market data. |
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| Autores principais: | Bravo, Jorge Miguel |
| Assunto: | Longevity-linked life annuities Pension decumulation Risk-sharing Retirement wallet Pension reform Equity release mechanisms Cultural Studies Political Science and International Relations Economics, Econometrics and Finance(all) |
| Ano: | 2019 |
| País: | Portugal |
| Tipo de documento: | artigo |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade Nova de Lisboa |
| Idioma: | inglês |
| Origem: | Repositório Institucional da UNL |
| Resumo: | Longevity increases and population ageing create challenges for all societal institutions, particularly those providing retirement income, health care, and long-term care services. At the individual level, an obvious question is how to ensure all retirees have an adequate, secure, stable and predictable lifelong income stream that will allow them to maintain a target standard of living for however long the individual lives. In this paper we introduce and discuss the concept of retirement wallet representing the multiple income and service sources individuals and their families will have to fund for longer lives. We then address the main decumulation risks and options, including the adoption of a given longevity insurance strategy, of a programmed withdrawal strategy and of an investment strategy. The main payout options available for allocating assets accumulated in pension plans are discussed, particularly the role of traditional and innovative investment and longevity risk-sharing structures. We provide illustrative results for the price of innovative participating longevity-linked life annuities (PLLAs) that link benefits to the dynamics of both a longevity index and an interest rate adjustment factor using Spanish mortality and financial market data. |
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