Annuities and Other Retirement Products
Annuities and
Other Retirement Products
Designing the Payout Phase
Roberto Rocha
Dimitri Vittas
Heinz P. Rudolph
2011 The International Bank for Reconstruction and Development / The World Bank
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Washington, DC 20433
Telephone: 202-473-1000
Internet: www.worldbank.org
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ISBN: 978-0-8213-8573-9
eISBN: 978-0-8213-8574-6
DOI: 10.1596/978-0-8213-8573-9
Library of Congress Cataloging-in-Publication Data
Rocha, Roberto Rezende.
Annuities and other retirement products : designing the payout phase / Roberto Rocha, Dimitri Vittas, Heinz P. Rudolph.
p. cm. (Directions in development)
Includes bibliographical references and index.
ISBN 978-0-8213-8573-9 (alk. paper) ISBN 978-0-8213-8574-6
1. Pensions. 2. Annuities. 3. Old age pensions. 4. PensionsGovernment policy. 5. AnnuitiesGovernment policy. 6. Old age pensionsGovernment policy. I. Vittas, Dimitri. II. Rudolph, Heinz P. III. Title.
HD7091.R63 2010
331.2524dc22
2010036026
Cover photo: iStockphoto.com/ozgurdonmaz
Cover design: Quantum Think
Contents
Preface |
Abbreviations |
Chapter 1 | Introduction and Overview |
Policy Issues in the Design of Payout Phases in Emerging Countries |
Scope and Structure of the Book |
Overview of Country Findings |
Summary of Policy Recommendations |
References
|
Chapter 2 | Designing the Payout Phase of Pension Systems: Policy Issues, Constraints, and Options |
Pensioner Risks and Retirement Products |
Risks of Retirement Products for Providers and Governments |
Policy Options |
Summary and Main Policy Recommendations |
Notes |
References
|
Chapter 3 | The Payout Phase of Pension Systems: A Comparison of Five Countries |
Overview of Pension Systems |
Product Regulation and the Level of Annuitization |
Provider Regulation |
Lessons for Other Countries |
Conclusion |
Notes |
References
|
Chapter 4 | Australia: Mandating Retirement Savings without Lifetime Annuitization |
The Australian Pension System |
Menu of Retirement Products |
Regulation and Supervision |
Concluding Remarks |
Notes |
References
|
Chapter 5 | Switzerland: Rigid Regulation and the Challenge of Sustainability |
Overview of the Swiss Pension System |
Retirement Products and Moneys Worth Ratios |
Regulation and Supervision |
Concluding Remarks |
References
|
Chapter 6 | Sweden: Promoting Personal Responsibility with a Strong Public Commitment |
Public and Occupational Pensions |
The Demand for Retirement Products |
Insurance Providers and Insurance Products |
Management of Risks and Supervision |
Concluding Remarks |
Notes |
References
|
Chapter 7 | Denmark: The Benefits of Group Contracts with Deferred Annuities and Risk-Sharing Features |
The Danish Pension System |
Retirement Products, Replacement Rates, and Risk Sharing |
Regulation and Supervision |
Concluding Remarks |
Notes |
References
|
Chapter 8 | Chile: Building a Robust Market for Fixed Real Annuities |
Overall Structure of the Pension and Retirement System |
The Menu and Performance of Retirement Products |
Regulation and Supervision |
Concluding Remarks |
Notes |
References
|
Index |
Figures |
3.1 | Cost of Old-Age Benefits in Pillars 0 and 1 |
3.2 | Annual Contributions in Second Pillars |
3.3 | Total Retirement Assets |
3.4 | Target Replacement Rates under Different Scenarios |
3.5 | Level of Life Annuitization |
4.1 | Projections of Superannuation Assets and Age Pension Coverage |
4.2 | Potential Aggregate Replacement Ratios for Selected Deciles |
5.1 | Market Interest Rates and the Minimum Interest Rate, 19902010 |
5.2 | Replacement Rates as a Function of Income: First and Second Pillar |
6.1 | The Guaranteed Pension and Its Relation to the Combined NDC-FDC Pension, 2007 |
6.2 | Ten-Year Government Bond Rate, Monthly Values, January 1987March 2008 |
7.1 | Guaranteed Interest Rates and After-Tax Yield to Maturity on a 10-Year Government Bond, 19882005 |
7.2 | Average Expected Replacement Rates for Different Groups of Education, 2000 and 2045 |
8.1 | Insurance Premiums in Chile, 19902008 |
8.2 | Pension and Insurance Assets, 19902008 |
8.3 | Number of Life Insurance Companies, Annuity Providers, and AFPs, 19902008 |
8.4 | Market Concentration Ratios in Pensions and Annuities: Herfindahl Ratio and Share of Three Largest Firms, 19882005 |
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