Annuity Values in Defined Contribution Retirement Systems: The Case of Singapore and Australia / Suzanne Doyle, Olivia S. Mitchell, John Piggott.

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Doyle, Suzanne

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w8091.Publication details: Cambridge, Mass. National Bureau of Economic Research 2001.Description: 1 online resource: illustrations (black and white)Subject(s):

G23 - Non-bank Financial Institutions • Financial Instruments • Institutional Investors
J14 - Economics of the Elderly • Economics of the Handicapped • Non-Labor Market Discrimination

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Abstract: In this paper we derive and compare the value of life annuity products in an international context. Our specific goal is to assess the money's worth and adverse selection impact of annuities in two countries Singapore and Australia that have mandatory DC-type retirement plans. This similarity in plan type is offset by differences in the two countries' national retirement policies. Our comparison therefore exploits the natural experiment in annuity pricing and purchase behaviour under alternative retirement regimes. The results show that after controlling on administrative loadings, there appear to be important differences in measured adverse selection across countries. Specifically, selection appears to be far stronger in the presence of a generous public benefit scheme that provides a first line of defence against the risk of old-age poverty.

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Working Paper	Biblioteca Digital	Colección NBER	nber w8091 (Browse shelf(Opens below))	Not For Loan

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January 2001.

In this paper we derive and compare the value of life annuity products in an international context. Our specific goal is to assess the money's worth and adverse selection impact of annuities in two countries Singapore and Australia that have mandatory DC-type retirement plans. This similarity in plan type is offset by differences in the two countries' national retirement policies. Our comparison therefore exploits the natural experiment in annuity pricing and purchase behaviour under alternative retirement regimes. The results show that after controlling on administrative loadings, there appear to be important differences in measured adverse selection across countries. Specifically, selection appears to be far stronger in the presence of a generous public benefit scheme that provides a first line of defence against the risk of old-age poverty.