Investment risk-sharing: A State-of-the-Art Report

The authors are part of the ARC research project “Minimising Longevity and Investment Risk while Optimising Future Pension Plans”. The goal is to develop new pension product designs that keep the customers’ needs at the forefront. As a first step, this report was written to familiarize the project team with the existing knowledge on decumulation strategies.
The key question that we sought to answer is: “What structures in the pension arena have been proposed for investment risk-sharing?”. The structures cover participating policies (or with-profits contracts), defined benefit pension plans and collective defined contribution plans as well as theoretical structures which have proposed in the literature.