Annuity Values in Defined Contribution Retirement Systems: The Case of Singapore and Australia

Suzanne Doyle, Olivia S. Mitchell, John Piggott

NBER Working Paper No. 8091
Issued in January 2001
NBER Program(s):   LS   PE   AG

In this paper we derive and compare the value of life annuity products in an international context. Our specific goal is to assess the money's worth and adverse selection impact of annuities in two countries Singapore and Australia that have mandatory DC-type retirement plans. This similarity in plan type is offset by differences in the two countries' national retirement policies. Our comparison therefore exploits the natural experiment in annuity pricing and purchase behaviour under alternative retirement regimes. The results show that after controlling on administrative loadings, there appear to be important differences in measured adverse selection across countries. Specifically, selection appears to be far stronger in the presence of a generous public benefit scheme that provides a first line of defence against the risk of old-age poverty.

download in pdf format
   (198 K)

email paper

The NBER Bulletin on Aging and Health provides summaries of publications like this.  You can sign up to receive the NBER Bulletin on Aging and Health by email.

This paper is available as PDF (198 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w8091

Published: Doyle, Suzanne, Olivia S. Mitchell and John Piggott. "Annuity Values In Defined Contribution Retirement Systems: Australia And Singapore Compared," Australian Economic Review, 2004, v37(4,Dec), 402-416.

Users who downloaded this paper also downloaded these:
Brown, Mitchell, and Poterba w7812 Mortality Risk, Inflation Risk, and Annuity Products
Mitchell and McCarthy w9092 Annuities for an Ageing World
Finkelstein and Poterba w8045 Adverse Selection in Insurance Markets: Policyholder Evidence from the U.K. Annuity Market
Mitchell w8567 Developments in Decumulation: The Role of Annuity Products in Financing Retirement
Friedman and Warshawsky w1682 The Cost of Annuities: Implications for Saving Behavior and Bequests

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us