dc.contributor.author | Cannon, Edmund | en_GB |
dc.contributor.author | Tonks, Ian | en_GB |
dc.date.accessioned | 2010-04-13T15:38:53Z | en_GB |
dc.date.accessioned | 2011-01-25T10:28:30Z | en_GB |
dc.date.accessioned | 2013-03-20T11:11:04Z | |
dc.date.issued | 2010-01 | en_GB |
dc.description.abstract | This paper describes the operation of both the compulsory pension annuity and
voluntary annuity markets in the UK. The paper reports on the movement of
UK annuity price quotes in the voluntary market from 1957-2009, and in the
pension annuity market from 1994 to 2009, and examines whether annuities
were fairly priced over this period. The paper computes the money’s worth of
annuities, and finds that on average the money’s worth in the voluntary market
over the sample period for 65-year old males has been a very high 98%. In the
larger compulsory pension annuity over a shorter sample period we estimate
that the money’s worth for 65-year old males has been 89%, and for 65-year old
females has been a similar but slightly larger 90%. Taking into account load
factors associated with annuity contracts and in comparison with other
financial and insurance products this implies that annuities are fairly priced.
However the value of the money’s worth is sensitive to the assumptions made
about life expectancy, and we explain the assumptions made about the
appropriate life tables to apply to annuitants in these annuity markets. There is
some evidence that money’s worth has fallen since 2002. We discuss a number
of factors that could have effected the fall in money’s worth, including: changes
in insurance regulation; changes in industrial concentration; an insurance
cycle; pricing of mortality uncertainty and the growth in the impaired lives
market. | en_GB |
dc.description.sponsorship | Part of this work arose out of a project at the Department of Work and Pensions | en_GB |
dc.identifier.uri | http://hdl.handle.net/10036/96441 | en_GB |
dc.language.iso | en | en_GB |
dc.publisher | University of Exeter Business School | en_GB |
dc.relation.ispartofseries | Xfi Centre for Finance and Investment working papers | en_GB |
dc.relation.ispartofseries | 10/01 | en_GB |
dc.relation.url | http://xfi.exeter.ac.uk/workingpapers/1001.pdf | en_GB |
dc.subject | annuities | en_GB |
dc.subject | annuity markets | en_GB |
dc.subject | pension replacement ratio | en_GB |
dc.title | Compulsory and voluntary annuities markets in the UK | en_GB |
dc.type | Working Paper | en_GB |
dc.date.available | 2010-04-13T15:38:53Z | en_GB |
dc.date.available | 2011-01-25T10:28:30Z | en_GB |
dc.date.available | 2013-03-20T11:11:04Z | |
dc.identifier.issn | 1743-548X | en_GB |
dc.description | Working paper | en_GB |