The Pension Crisis concerns the changing demographic profile of the economy: an increasing number of elderly persons supported by fewer young people. Governments around the world are responding to this impending crisis by shifting their pension policies away from pay-as-you-go systems towards individual savings schemes. These savings need to be converted into a pension at retirement, and annuities provide this function. This book is a comprehensive study of annuity
The book starts by outlining the context of public policy towards pensions, and explains the different types of annuities available, focusing on the UK which has the largest annuity market in the world. It examines how annuities are priced, and describes the techniques of mortality measurement. As a background, it provides a history of annuities, and the experience of annuity markets in a number of other countries. The book outlines the economic theory behind annuities, and explains how
annuities insure consumers against longevity risks. It goes on to describes how annuities markets function: how they work, and whether they are efficient, leading onto a discussion of the annuity puzzle. The book concludes by discussing the regulatory framework, assets available to back annuity liabilities,
and recent developments in annuity markets.
Publisher: Oxford University Press
Number of pages: 316
Weight: 629 g
Dimensions: 241 x 162 x 22 mm
`The shift from defined benefit to defined contribution pension plans, in both the public and private sectors and around the world, has drawn new attention to the long-standing problem of insuring against longevity risk in retirement. This volume provides a superb introduction to the operation of current annuity markets and the economic analysis of these markets.'
James Poterba, Mitsui Professor of Economics, MIT and President, National Bureau of Economic Research
`Converting savings into sustainable spending is fast becoming the major challenge for the baby boomers. This book provides a great source of information on annuities from both an actuarial science and behavioural economics perspective and on how we can help meet this need.'
Tom Boardman, Director of Retirement Strategy, Prudential
`As the baby boomers begin to retire from 2010, an understanding of the role and importance of annuities has never been more needed. This is because they are the only financial instrument ever devised that can hedge longevity risk. More than half the world's life annuities are sold in the UK, and two of the UK's leading experts have written this timely book on annuities. It will become a standard reference.'
David Blake, Professor of Pension Economics at Cass Business School