A Redistributive GSA Scheme to Cope With Socio-Economic Mortality Differentials

Maria Aragona, Luca Regis and Elena Vigna

Carlo Alberto Notebooks from Collegio Carlo Alberto

Abstract: Longevity risk is threatening the sustainability of traditional pension sys tems. To deal with this issue, decumulation strategies alternative to annuities have been proposed in the literature. However, heterogeneity in mortality experiences in the pool of policyholders due to socio-economic classes gen erates inequity, because of implicit wealth transfers from the more disadvan taged to the wealthier classes. We address this issue in a GSA (Group Self Annuitization) scheme in the presence of stochastic mortality by propos ing a redistributive GSA scheme where benefits are optimally shared across classes. The expected present values of the benefits in a standard GSA scheme show relevant gaps across socio-economic groups, which are re duced in the redistributive GSA Scheme. We explore sensitivity to pool size and interest rates.

Keywords: group self-annuitization; mortality differentials; socio-economic classes; stochastic mortality; redistribution. (search for similar items in EconPapers)
Pages: 42 pages
Date: 2024
New Economics Papers: this item is included in nep-age
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wpaper:732

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