Improving Money’s Worth Ratio Calculations: The Case of Singapore’s Pension Annuities

Joelle H. Fong, Lemaire Jean () and Tse Yiu K. ()
Additional contact information
Lemaire Jean: Department of Statistics, Wharton School, 400 JMHH 3730 Walnut Street, Philadelphia, PA 19194-6340, USA
Tse Yiu K.: School of Economics, Singapore Management University, 70 Stamford Road, #B1-38a, Singapore 178901, Singapore

Asia-Pacific Journal of Risk and Insurance, 2014, vol. 8, issue 1, 1-26

Abstract: 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.

Keywords: annuities; money’s worth ratio; risk measures (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/apjri-2013-0027 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

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:bpj:apjrin:v:8:y:2014:i:1:p:1-26:n:6

Ordering information: This journal article can be ordered from
https://www.degruyter.com/journal/key/apjri/html

DOI: 10.1515/apjri-2013-0027

Access Statistics for this article

Asia-Pacific Journal of Risk and Insurance is currently edited by Michael R. Powers

More articles in Asia-Pacific Journal of Risk and Insurance from De Gruyter
Bibliographic data for series maintained by Peter Golla ().