Unisex life care annuities embedded in a pay-as-you-go pension system: Analysing the issue of gender redistribution

This paper deals with the idea of converting retirement benefit into a life care annuity with graded benefits using a pre-existing public pay-as-you-go pension scheme. Based on accurate biometric data from Australia and the US, the paper shows that using gender-neutral annuity factors to compute the...

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Bibliographic Details
Published inJournal of population ageing Vol. 12; no. 4; pp. 405 - 426
Main Authors Vidal-Meliá, Carlos, Ventura-Marco, Manuel, Pla-Porcel, Javier
Format Journal Article
LanguageEnglish
Published Dordrecht Springer Netherlands 01.12.2019
Springer Nature B.V
Subjects
Aging
Annuities
Biometrics
Conversion
Demography
Embedded systems
Gender
Geriatrics/Gerontology
Medicine/Public Health
Redistribution
Retirement
Retirement benefits
Social Sciences
Sociology
Redistribution
G22
H55
I13
Gender
Long-term care insurance
J14
Life care annuities
Retirement
J26
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Summary:This paper deals with the idea of converting retirement benefit into a life care annuity with graded benefits using a pre-existing public pay-as-you-go pension scheme. Based on accurate biometric data from Australia and the US, the paper shows that using gender-neutral annuity factors to compute the initial benefit involves a large increase in ex-ante gender redistribution compared to a system without long-term coverage. In spite of the very different biometric data, the results are surprisingly similar for both countries. To disentangle the hidden redistribution, a methodology based on conversion (actuarial) factors is used. The value of the actuarial factor relies on a multistate framework in which transitions are modeled from the initial health state to the absorbing state. We also look at what might happen if an annuitant’s initial heath state is not able when they become a beneficiary.
ISSN:1874-7884
1874-7876
DOI:10.1007/s12062-018-9229-3