Date of this Version
Asia-Pacific Journal of Risk and Insurance
This paper contributes to a better understanding of the risks involved in a life annuity investment. We study the full distribution of weighted annuity benefits and quantify risk measures such as dispersion and skewness, thereby extending the usefulness of the popular money’s worth valuation framework for life annuities. Using data from pension annuities in Singapore, we also introduce several risk measures that might appeal to less financially sophisticated retirees. A more detailed and accurate picture of the risk of investing in life annuities emerges, enabling prospective annuitants to differentiate among products that may appear seemingly uniform in terms of money’s worth, but vary widely in terms of their risk attributes.
The final publication is available at www.degruyter.com
annuities, money's worth ratio, risk measures
Fong, J. H., Lemaire, J., & Tse, Y. K. (2014). Improving Money’s Worth Ratio Calculations: The Case of Singapore’s Pension Annuities. Asia-Pacific Journal of Risk and Insurance, 8 (1), 1-26. http://dx.doi.org/10.1515/apjri-2013-0027
Date Posted: 27 November 2017
This document has been peer reviewed.