The Decumulation (Payout) Phase of Defined Contribution Pillars : Policy Issues in the Provision of Annuities and Other Benefits
Most countries reforming their pension system, focus more on the accumulation phase, than on the decumulation (pay-out), because the number of beneficiaries is likely to be small initially, especially if older workers are discouraged from joining t...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2000/10/692857/decumulation-payout-phase-defined-contribution-pillars-policy-issues-provision-annuities-other-benefits http://hdl.handle.net/10986/19781 |
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okr-10986-19781 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AFFILIATED COMPANIES AGENTS ANNUITIES ANNUITIES MARKETS ANNUITY BENEFICIARIES BONDS CONSUMERS CONTRIBUTION RATES CROSS SUBSIDIZATION DEFERRED ANNUITIES DEFINED BENEFIT PLANS DISABILITY INSURANCE DISABILITY PENSIONS DISCOUNT RATES DISCOUNTED PRESENT VALUE EMPLOYMENT FINANCIAL INSTRUMENTS FRAUD GAMBLING GROUP INSURANCE GUARANTEED PERIOD HOUSING INCOME ELASTICITY INCOME GROUPS INDIVIDUAL ACCOUNTS INFLATION INSURANCE COMPANIES INSURANCE COMPANY INSURANCE INDUSTRY INSURANCE MARKETS INSURANCE PREMIUMS INTEREST RATES INVESTMENT PERFORMANCE INVESTMENT RETURNS INVESTMENT RISK LIFE ANNUITIES LIFE ANNUITY LIFE EXPECTANCY LIFE INSURANCE LONGEVITY INSURANCE LONGEVITY RISK LUMP SUM WITHDRAWALS MANDATORY RETIREMENT MORAL HAZARD MORAL HAZARD PROBLEM MORTALITY TABLES NORMAL RETIREMENT AGE OCCUPATIONAL PENSION PLANS OCCUPATIONAL PENSIONS OLD AGE BENEFITS PENSION COVERAGE PENSION FUND PENSION FUND MANAGEMENT PENSION FUNDS PENSION PLANS PENSION REFORM PENSION RIGHTS PENSION SCHEMES PENSION SYSTEM PENSION SYSTEMS PENSIONS PREMIUMS PRIVATE PENSION PRIVATE PILLAR PRIVATE PILLARS PROGRAMS PROVIDENT FUNDS PUBLIC AGENCIES PUBLIC PILLAR PUBLIC POLICIES PUBLIC SYSTEM RESERVES RETAIL MARKET RETIREMENT RETIREMENT BENEFITS RETIREMENT SAVINGS RISK CATEGORIES SAVING PLANS SAVINGS PLANS SCHEDULED WITHDRAWALS SECURITIES SOCIAL POLICY SOCIAL SECURITY SURVIVOR BENEFITS SURVIVOR PENSIONS SURVIVORS BENEFITS SURVIVORS INSURANCE TAX RULES THRIFT SAVINGS PLAN UNEMPLOYMENT BENEFITS UNEMPLOYMENT INSURANCE VARIABLE ANNUITIES VOLUNTARY ANNUITY MARKETS WAGES |
| spellingShingle |
AFFILIATED COMPANIES AGENTS ANNUITIES ANNUITIES MARKETS ANNUITY BENEFICIARIES BONDS CONSUMERS CONTRIBUTION RATES CROSS SUBSIDIZATION DEFERRED ANNUITIES DEFINED BENEFIT PLANS DISABILITY INSURANCE DISABILITY PENSIONS DISCOUNT RATES DISCOUNTED PRESENT VALUE EMPLOYMENT FINANCIAL INSTRUMENTS FRAUD GAMBLING GROUP INSURANCE GUARANTEED PERIOD HOUSING INCOME ELASTICITY INCOME GROUPS INDIVIDUAL ACCOUNTS INFLATION INSURANCE COMPANIES INSURANCE COMPANY INSURANCE INDUSTRY INSURANCE MARKETS INSURANCE PREMIUMS INTEREST RATES INVESTMENT PERFORMANCE INVESTMENT RETURNS INVESTMENT RISK LIFE ANNUITIES LIFE ANNUITY LIFE EXPECTANCY LIFE INSURANCE LONGEVITY INSURANCE LONGEVITY RISK LUMP SUM WITHDRAWALS MANDATORY RETIREMENT MORAL HAZARD MORAL HAZARD PROBLEM MORTALITY TABLES NORMAL RETIREMENT AGE OCCUPATIONAL PENSION PLANS OCCUPATIONAL PENSIONS OLD AGE BENEFITS PENSION COVERAGE PENSION FUND PENSION FUND MANAGEMENT PENSION FUNDS PENSION PLANS PENSION REFORM PENSION RIGHTS PENSION SCHEMES PENSION SYSTEM PENSION SYSTEMS PENSIONS PREMIUMS PRIVATE PENSION PRIVATE PILLAR PRIVATE PILLARS PROGRAMS PROVIDENT FUNDS PUBLIC AGENCIES PUBLIC PILLAR PUBLIC POLICIES PUBLIC SYSTEM RESERVES RETAIL MARKET RETIREMENT RETIREMENT BENEFITS RETIREMENT SAVINGS RISK CATEGORIES SAVING PLANS SAVINGS PLANS SCHEDULED WITHDRAWALS SECURITIES SOCIAL POLICY SOCIAL SECURITY SURVIVOR BENEFITS SURVIVOR PENSIONS SURVIVORS BENEFITS SURVIVORS INSURANCE TAX RULES THRIFT SAVINGS PLAN UNEMPLOYMENT BENEFITS UNEMPLOYMENT INSURANCE VARIABLE ANNUITIES VOLUNTARY ANNUITY MARKETS WAGES James, Estelle Vittas, Dimitri The Decumulation (Payout) Phase of Defined Contribution Pillars : Policy Issues in the Provision of Annuities and Other Benefits |
| relation |
Policy Research Working Paper;No. 2464 |
| description |
Most countries reforming their pension
system, focus more on the accumulation phase, than on the
decumulation (pay-out), because the number of beneficiaries
is likely to be small initially, especially if older workers
are discouraged from joining the new system. Policymakers
place a priority on the new accumulation system being
administratively efficient, and well regulated. But the
decumulation phase must also be well organized, and
efficient. The purpose of pension systems is, after all, to
pay retirement benefits - old age, survivor, and disability
pensions. The authors argue that: 1) Pay-out arrangements
are likely to evolve gradually, through trial and error, as
problems are discovered and tackled. 2) Adverse selection
may not be as great a problem as is sometimes thought. 3)
Many other annuity, and insurance market problems have yet
to be solved, and policies must be formulated to make these
markets work as well. The under-development of voluntary
annuity markets is only partly explained by adverse
selection, argue the authors. Other factors are also at
work: the bequest, and precautionary motives for saving;
individuals' myopia and ignorance; mistrust of
insurance companies; the "luxury good" nature of
annuities; tax policies that favor lump sum withdrawals;
and, last but not least, public policies (such as the offer
of social security pensions and the encouragement of
occupational pension plans) that tend to crowd out
individual annuities. The long-term success of pension
reform depends on vigorous efforts to develop the insurance
industry. Weak and under-developed in most developing
countries, the insurance industry should play a central role
in providing old age, survivor, and disability benefits.
Many policy issues require careful thought, and extensive
empirical analysis: Should annuitization be mandatory, and
at what level? Should indexed (or "real")
annuities be required? Should variable annuities be
permitted, or encouraged? Should joint annuities be
required? How much "group rating" and "risk
classification" should be permitted? |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
James, Estelle Vittas, Dimitri |
| author_facet |
James, Estelle Vittas, Dimitri |
| author_sort |
James, Estelle |
| title |
The Decumulation (Payout) Phase of Defined Contribution Pillars : Policy Issues in the Provision of Annuities and Other Benefits |
| title_short |
The Decumulation (Payout) Phase of Defined Contribution Pillars : Policy Issues in the Provision of Annuities and Other Benefits |
| title_full |
The Decumulation (Payout) Phase of Defined Contribution Pillars : Policy Issues in the Provision of Annuities and Other Benefits |
| title_fullStr |
The Decumulation (Payout) Phase of Defined Contribution Pillars : Policy Issues in the Provision of Annuities and Other Benefits |
| title_full_unstemmed |
The Decumulation (Payout) Phase of Defined Contribution Pillars : Policy Issues in the Provision of Annuities and Other Benefits |
| title_sort |
decumulation (payout) phase of defined contribution pillars : policy issues in the provision of annuities and other benefits |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/10/692857/decumulation-payout-phase-defined-contribution-pillars-policy-issues-provision-annuities-other-benefits http://hdl.handle.net/10986/19781 |
| _version_ |
1764440705057423360 |
| spelling |
okr-10986-197812021-04-23T14:03:44Z The Decumulation (Payout) Phase of Defined Contribution Pillars : Policy Issues in the Provision of Annuities and Other Benefits James, Estelle Vittas, Dimitri AFFILIATED COMPANIES AGENTS ANNUITIES ANNUITIES MARKETS ANNUITY BENEFICIARIES BONDS CONSUMERS CONTRIBUTION RATES CROSS SUBSIDIZATION DEFERRED ANNUITIES DEFINED BENEFIT PLANS DISABILITY INSURANCE DISABILITY PENSIONS DISCOUNT RATES DISCOUNTED PRESENT VALUE EMPLOYMENT FINANCIAL INSTRUMENTS FRAUD GAMBLING GROUP INSURANCE GUARANTEED PERIOD HOUSING INCOME ELASTICITY INCOME GROUPS INDIVIDUAL ACCOUNTS INFLATION INSURANCE COMPANIES INSURANCE COMPANY INSURANCE INDUSTRY INSURANCE MARKETS INSURANCE PREMIUMS INTEREST RATES INVESTMENT PERFORMANCE INVESTMENT RETURNS INVESTMENT RISK LIFE ANNUITIES LIFE ANNUITY LIFE EXPECTANCY LIFE INSURANCE LONGEVITY INSURANCE LONGEVITY RISK LUMP SUM WITHDRAWALS MANDATORY RETIREMENT MORAL HAZARD MORAL HAZARD PROBLEM MORTALITY TABLES NORMAL RETIREMENT AGE OCCUPATIONAL PENSION PLANS OCCUPATIONAL PENSIONS OLD AGE BENEFITS PENSION COVERAGE PENSION FUND PENSION FUND MANAGEMENT PENSION FUNDS PENSION PLANS PENSION REFORM PENSION RIGHTS PENSION SCHEMES PENSION SYSTEM PENSION SYSTEMS PENSIONS PREMIUMS PRIVATE PENSION PRIVATE PILLAR PRIVATE PILLARS PROGRAMS PROVIDENT FUNDS PUBLIC AGENCIES PUBLIC PILLAR PUBLIC POLICIES PUBLIC SYSTEM RESERVES RETAIL MARKET RETIREMENT RETIREMENT BENEFITS RETIREMENT SAVINGS RISK CATEGORIES SAVING PLANS SAVINGS PLANS SCHEDULED WITHDRAWALS SECURITIES SOCIAL POLICY SOCIAL SECURITY SURVIVOR BENEFITS SURVIVOR PENSIONS SURVIVORS BENEFITS SURVIVORS INSURANCE TAX RULES THRIFT SAVINGS PLAN UNEMPLOYMENT BENEFITS UNEMPLOYMENT INSURANCE VARIABLE ANNUITIES VOLUNTARY ANNUITY MARKETS WAGES Most countries reforming their pension system, focus more on the accumulation phase, than on the decumulation (pay-out), because the number of beneficiaries is likely to be small initially, especially if older workers are discouraged from joining the new system. Policymakers place a priority on the new accumulation system being administratively efficient, and well regulated. But the decumulation phase must also be well organized, and efficient. The purpose of pension systems is, after all, to pay retirement benefits - old age, survivor, and disability pensions. The authors argue that: 1) Pay-out arrangements are likely to evolve gradually, through trial and error, as problems are discovered and tackled. 2) Adverse selection may not be as great a problem as is sometimes thought. 3) Many other annuity, and insurance market problems have yet to be solved, and policies must be formulated to make these markets work as well. The under-development of voluntary annuity markets is only partly explained by adverse selection, argue the authors. Other factors are also at work: the bequest, and precautionary motives for saving; individuals' myopia and ignorance; mistrust of insurance companies; the "luxury good" nature of annuities; tax policies that favor lump sum withdrawals; and, last but not least, public policies (such as the offer of social security pensions and the encouragement of occupational pension plans) that tend to crowd out individual annuities. The long-term success of pension reform depends on vigorous efforts to develop the insurance industry. Weak and under-developed in most developing countries, the insurance industry should play a central role in providing old age, survivor, and disability benefits. Many policy issues require careful thought, and extensive empirical analysis: Should annuitization be mandatory, and at what level? Should indexed (or "real") annuities be required? Should variable annuities be permitted, or encouraged? Should joint annuities be required? How much "group rating" and "risk classification" should be permitted? 2014-08-27T20:26:45Z 2014-08-27T20:26:45Z 2000-10 http://documents.worldbank.org/curated/en/2000/10/692857/decumulation-payout-phase-defined-contribution-pillars-policy-issues-provision-annuities-other-benefits http://hdl.handle.net/10986/19781 English en_US Policy Research Working Paper;No. 2464 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |