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The mechanics and regulation of variable payout annuities

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  • Vittas, Dimitri

Abstract

This paper discusses the mechanics and regulation of participating and unit-linked variable payout annuities. These annuities offer benefits that are not fixed in either nominal or real terms but depend on the performance of the fund or funds in which the underlying reserve assets are invested, their profit sharing features, and the treatment of longevity risk. The paper focuses on the treatment of investment and longevity risks by different types of these annuities and underscores the challenge of establishing a robust and effective framework of regulation and supervision for these products. The paper also addresses the exposure of annuitants to integrity risk and places special emphasis on the need for a high level of meaningful transparency.

Suggested Citation

  • Vittas, Dimitri, 2011. "The mechanics and regulation of variable payout annuities," Policy Research Working Paper Series 5762, The World Bank.
    • Handle: RePEc:wbk:wbrwps:5762
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    References listed on IDEAS

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    11. Valdes-Prieto, Salvador, 1998. "Risks in pensions and annuities : efficient designs," Social Protection Discussion Papers and Notes 20847, The World Bank.
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    Cited by:

    1. Donnelly, Catherine & Guillén, Montserrat & Nielsen, Jens Perch, 2013. "Exchanging uncertain mortality for a cost," Insurance: Mathematics and Economics, Elsevier, vol. 52(1), pages 65-76.

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    Keywords

    Debt Markets; Insurance&Risk Mitigation; Investment and Investment Climate; Pensions&Retirement Systems; Non Bank Financial Institutions;
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