Personal pensions with risk sharing

Research output: Contribution to journalArticleScientificpeer-review

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Abstract

To improve the design of the pay-out phase of DC plans, this paper proposes a new approach to structure pension products: the Personal Pension with Risk sharing (PPR). By unbundling and valuing the investment, (dis)saving, insurance and risk-sharing functions of pensions, PPRs allow risk management and (dis)saving to be customized to the specific features of heterogeneous individuals. Unlike variable annuities, PPRs allow investment risks to be combined with longevity insurance without giving rise to high year-on-year volatility in consumption streams or opaque and rigid valuation and smoothing rules. The synthesis of a PPR structure provides new opportunities for product innovation and for the comparison of retirement products.

Original languageEnglish
Pages (from-to)450-466
JournalJournal of Pension Economics and Finance
Volume16
Issue number4
DOIs
Publication statusPublished - Oct 2017

Keywords

  • Private pensions
  • defined benefit
  • defined contribution
  • risk management
  • risk sharing
  • variable annuities
  • MORTALITY RISK

Cite this

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title = "Personal pensions with risk sharing",
abstract = "To improve the design of the pay-out phase of DC plans, this paper proposes a new approach to structure pension products: the Personal Pension with Risk sharing (PPR). By unbundling and valuing the investment, (dis)saving, insurance and risk-sharing functions of pensions, PPRs allow risk management and (dis)saving to be customized to the specific features of heterogeneous individuals. Unlike variable annuities, PPRs allow investment risks to be combined with longevity insurance without giving rise to high year-on-year volatility in consumption streams or opaque and rigid valuation and smoothing rules. The synthesis of a PPR structure provides new opportunities for product innovation and for the comparison of retirement products.",
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author = "Lans Bovenberg and Theo Nijman",
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publisher = "CAMBRIDGE UNIV PRESS",
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Personal pensions with risk sharing. / Bovenberg, Lans; Nijman, Theo.

In: Journal of Pension Economics and Finance, Vol. 16, No. 4, 10.2017, p. 450-466.

Research output: Contribution to journalArticleScientificpeer-review

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AB - To improve the design of the pay-out phase of DC plans, this paper proposes a new approach to structure pension products: the Personal Pension with Risk sharing (PPR). By unbundling and valuing the investment, (dis)saving, insurance and risk-sharing functions of pensions, PPRs allow risk management and (dis)saving to be customized to the specific features of heterogeneous individuals. Unlike variable annuities, PPRs allow investment risks to be combined with longevity insurance without giving rise to high year-on-year volatility in consumption streams or opaque and rigid valuation and smoothing rules. The synthesis of a PPR structure provides new opportunities for product innovation and for the comparison of retirement products.

KW - Private pensions

KW - defined benefit

KW - defined contribution

KW - risk management

KW - risk sharing

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KW - MORTALITY RISK

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