September 2024

US. Annuities gain traction with middle-market consumers

Middle-income Americans will have a more difficult time managing their longevity risk in retirement now that fewer of them have defined benefit plans. Making matters more complicated is that many of these middle-market investors may have saved thousands of dollars throughout their careers in their employer-sponsored defined contribution plans but may not know how they can be certain their money lasts throughout the retirement. LIMRA’s Retirement Investor Study, published earlier this year, examined middle-income investors’ views of their retirement risks...

August 2024

A Two-Generation Model with Altruism for Reverse Mortgage Demand

By Yunxiao Wang, Katja Hanewald, Zilin (Scott) Shao, Hazel Bateman Reverse mortgage markets remain relatively small internationally, with one frequently cited reason being bequest motives. We study the role of reverse mortgages in intergenerational financial planning as a tool for families to bring forward bequests. We develop a new two-generation lifecycle model with parental altruism to compare the welfare gains of bequests and early bequests (inter vivos gifts) for homeowning parents and adult children seeking to purchase their first home....

A Two-Generation Model with Altruism for Reverse Mortgage Demand

By Yunxiao Wang, Katja Hanewald, Zilin (Scott) Shao & Hazel Bateman Reverse mortgage markets remain relatively small internationally, with one frequently cited reason being bequest motives. We study the role of reverse mortgages in intergenerational financial planning as a tool for families to bring forward bequests. We develop a new two-generation lifecycle model with parental altruism to compare the welfare gains of bequests and early bequests (inter vivos gifts) for homeowning parents and adult children seeking to purchase their first...

July 2024

Scammers are targetting older americans and their retirement savings

For nearly three months, Barry Heitin, a 76-year-old retired lawyer, thought he was part of a government investigation that felt like something out of the movies. He was actually assisting criminals in stealing hundreds of thousands of dollars — of his own money. Last fall, he spent just about every weekday doing the legwork and making withdrawals from his bank accounts as part of an intricate scam: He believed he was helping the feds safeguard his money and catch thieves...

UK. Lifetime annuity rates rise to over 7% in June

Lifetime annuity rates have continued to improve in 2024, rising to 7.08 per cent in June for a healthy 65 year old, according to the Standard Life Annuity Rate Tracker. This is around a 4 per cent increase from the average rate of 6.81 per cent in January and a 2.64 per cent improvement from 6.9 per cent in March. This would add an extra £3,659 to the average total lifetime income for a 65 year old man and £4,059 to...

The decumulation challenge

As people continue to live and work longer, the challenge of longevity – running out of money too soon into retirement - is hanging over many Canadians’ retirement plans. According to research from CCP Investments, only 45% of Canadians actually have some sort of plan in place for their retirement, with 53% admitting they don’t know how much money they’ll need to retire. Part of this anxiety stems from a change in the last decades in the retirement plan landscape, as...

Exiled pro-democracy Hong Kong activists blocked from accessing pensions

Two exiled pro-democracy Hong Kong activists have been blocked from accessing their pensions, depriving them of tens of thousands of US dollars of their savings and raising questions about the complicity of western financial institutions in the persecution of Chinese government critics. Assets, including pension savings, belonging to Ted Hui, a former pro-democracy legislator who is now based in Australia, were frozen shortly after he fled from Hong Kong in December 2020. The assets are held by HSBC, a British bank. HSBC briefly unfroze Hui’s...

June 2024

3M to transfer pension-payment obligations for 23,000 U.S. retirees

3M to book a charge of nearly $1 billion as it transfers some of its pension obligations to Met Tower Life 3M Co. said Thursday it will transfer about $2.5 billion of its pension-payment obligations to Metropolitan Tower Life Insurance Co. The consumer- and industrial-products company (MMM) said the transfer, which will affect the pension payments of about 23,000 U.S. retirees, won't change the amount of the monthly benefit payments. The only change is who is making the payments. 3M, which makes...

April 2024

“Safe” Annuity Retirement Products and a Possible US Retirement Crisis

By Thomas E. Lambert & Christopher B. Tobe This paper examines a looming possible crisis in many Americans’ retirement plans due to the proliferation of annuity products in their retirement investment portfolios. As defined benefit pension plans have almost completely disappeared as a means of retirement savings and have been replaced by defined contribution retirement plans over the last 40 to 50 years, a great number of private and public sector defined contribution retirement plans have become laden with insurance...

March 2024

The Riccati Tontine: How to Satisfy Regulators on Average

By Moshe A. Milevsky & T. S. Salisbury This paper presents a new type of modern accumulation-based tontine, called the Riccati tontine, named after two Italians: mathematician Jacobo Riccati (b. 1676, d. 1754) and financier Lorenzo di Tonti (b. 1602, d. 1684). The Riccati tontine is yet another way of pooling and sharing longevity risk, but is different from competing designs in two key ways. The first is that in the Riccati tontine, the representative investor is expected -- although...