Facing Up to Longevity with Old Actuarial Methods: A Comparison of Pooled Funds and Income Tontines

Marcel Bräutigam (), Montserrat Guillén () and Jens P. Nielsen ()
Additional contact information
Marcel Bräutigam: ETH Zurich
Montserrat Guillén: University of Barcelona
Jens P. Nielsen: City University London

The Geneva Papers on Risk and Insurance - Issues and Practice, 2017, vol. 42, issue 3, No 4, 406-422

Abstract: Abstract We compare the concepts underlying modern actuarial solutions to pension insurance and present two recently developed pension products—pooled annuity overlay funds (based on actuarial fairness) and equitable income tontines (based on equitability). These two products adopt specific approaches to the management of longevity risk by mutualising it among participants rather than transferring it completely to the insurer. As the market would appear to be ready for such innovations, our study seeks to establish a general framework for their introduction. We stress that the notion of actuarial fairness, which characterises pooled annuity overlay funds, enables participants to join and exit the fund at any time. Such freedom of action is a quite remarkable feature and one that cannot be matched by lifelong contracts.

Keywords: pensions; life table; retirement income; longevity risk; actuarial fairness; equitability (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://link.springer.com/10.1057/s41288-017-0056-1 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:gpprii:v:42:y:2017:i:3:d:10.1057_s41288-017-0056-1

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/41288/PS2

DOI: 10.1057/s41288-017-0056-1

Access Statistics for this article

The Geneva Papers on Risk and Insurance - Issues and Practice is currently edited by Christophe Courbage

More articles in The Geneva Papers on Risk and Insurance - Issues and Practice from Palgrave Macmillan, The Geneva Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().