Abstract
The financial industry has recently seen a push away from structured products and towards transparency. The trend is to decompose products, such that customers understand each component as well as its price. Yet the enormous annuity market combining investment and longevity has been almost untouched by this development.
We suggest a simple decomposed annuity structure that enables cost transparency and could be linked to any investment fund. It has several attractive features: (i) it works for any heterogeneous group; (ii) participants can leave before death without financial penalty; and (iii) participants have complete freedom over their own investment strategy.
We suggest a simple decomposed annuity structure that enables cost transparency and could be linked to any investment fund. It has several attractive features: (i) it works for any heterogeneous group; (ii) participants can leave before death without financial penalty; and (iii) participants have complete freedom over their own investment strategy.
| Original language | English |
|---|---|
| Pages (from-to) | 14-27 |
| Number of pages | 14 |
| Journal | Insurance: Mathematics and Economics |
| Volume | 56 |
| DOIs | |
| Publication status | Published - May 2014 |
Keywords
- Investment
- Mutual risk-sharing
- Lifetime savings
- Pooled annuity fund
- Pensions
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Catherine Donnelly
- School of Mathematical & Computer Sciences - Professor
- School of Mathematical & Computer Sciences, Actuarial Mathematics & Statistics - Professor
Person: Academic (Research & Teaching)