Converting retirement benefit into a life care annuity with graded benefits

Pla-Porcel, Javier; Ventura-Marco, Manuel; Vidal‐Meliá, Carlos

doi:10.1080/03461238.2016.1258370

Cited by 15 publications

(16 citation statements)

References 30 publications

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“…In line with the above, our model for valuing LCAs with graded benefits is based on the proposals first put forward by Pla-Porcel et al (2016b). They take into account a model with levels of dependence, with level 1 being the least severe and level the most.…”

Section: -Introductionmentioning

confidence: 93%

“…This authors of this paper are very interested in the idea of linking retirement and long-term care (LTC) coverage from a social insurance perspective. Chen (1994Chen ( , 2001Chen ( , 2003, Pitacco (2002), Forder and Fernandez (2011), Costa-Font et al (2014), Pla-Porcel et al (2016a, 2016b and Tanaka (2016) discuss this idea but with very different approaches, the last three of these papers being the most detailed. The proposal to convert retirement benefit into an LCA with graded benefits using a pre-existing public pay-as-you-go (PAYG) pension scheme is particularly attractive as a means of extending LTC coverage to retirement pensioners.…”

Section: -Introductionmentioning

confidence: 99%

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How Do Unisex Life Care Annuities Embedded in a Pay-As-You-Go Retirement System Affect Gender Redistribution?

Vidal‐Meliá

Ventura-Marco

Pla-Porcel³

2017

SSRN Journal

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This paper aims to assess gender redistribution when using unisex conversion factors to compute the initial benefit of life care annuities (LCAs) embedded in a pay-as-you-go (PAYG) pension system. We use a method based on actuarial factors to disentangle the hidden redistribution of LCAs with graded benefits. 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. According to our calculations for Australia and the US, the amount of gender redistribution is by no means irrelevant. In spite of the very different biometric data, the results are surprisingly similar for both countries. Risk equalization based on the "equal treatment" of men and women may not be fair, given that age, gender and health state are very significant risk factors in computing the initial benefit in a system covering retirement and long-term care.

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Section: -Introductionmentioning

confidence: 93%

Section: -Introductionmentioning

confidence: 99%

How Do Unisex Life Care Annuities Embedded in a Pay-As-You-Go Retirement System Affect Gender Redistribution?

Vidal‐Meliá

Ventura-Marco

Pla-Porcel³

2017

SSRN Journal

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“…The idea of embedding a public LTC insurance scheme in a notional defined contribution (NDC) framework has been examined: for instance, [25] develops a Swedish-type financial reporting statement and [26] looked into introducing life care annuities (LCAs). The same authors have also assessed the cost of converting retirement benefits into an LCA with graded benefits using a pre-existing public pay-as-you-go (PAYG) pension scheme [27]. Finally, [28] analyze whether it would be possible and desirable to use an NDC scheme to provide retirement and graded LTC benefits so as to help pensioners cope with the cost of LTC.…”

Section: Introductionmentioning

confidence: 99%

Role of Private Long-Term Care Insurance in Financial Sustainability for an Aging Society

2020

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This work analyzes and quantifies the significance of private long-term care insurance for the elderly in protecting families from the increased expenses derived from dependency. We propose an economic and financial model for consumption and income deficit evolution. Survival/dependency are modeled by a Markov process with stochastic simulation techniques to obtain random variable distributions. Based on the Spanish survey of household finances data, Spanish families are classified using a cluster analysis for the wealth decumulation period. The conclusion is that, for a generic family, hiring long-term care insurance causes a significant reduction in the probability of lack of liquidity, the mean first time of lack of liquidity (if it occurs), and the mean present value of overall liquidity needs. It is also observed that there are important differences between these impacts on different groups of families. These results show that hiring long-term care insurance would considerably lower financial problems in the decumulation period.

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“…is the annuity factor of the system with LTC coverage (this expression is fully developed in the paper by [109] for a more general case including the possibility of recovery).…”

Section: Summary Conclusion and Future Researchmentioning

confidence: 99%

Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits

2018

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This paper develops a social insurance accounting model for a notional defined contribution (NDC) scheme combining retirement and long-term care (LTC) contingencies. The procedure relies on standard double-entry bookkeeping and enables us to compile a "Swedish" type actuarial balance sheet (ABS) following a framework equivalent to an open group approach. This methodology is suitable for reporting the system's solvency status and can show periodical changes in the system's financial position by means of an income statement. The information underpinning the actuarial valuation is based on events and transactions that are verifiable at the valuation date, without considering expected future trends. The paper also contains an illustrative example to make it easier for policymakers to understand the main advantages and difficulties of our proposal. The policy conclusions stress the need to properly report social insurance benefits to enhance transparency and sustainability and to improve decision-making because it is in the public interest to do so.

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Converting retirement benefit into a life care annuity with graded benefits

Cited by 15 publications

References 30 publications

How Do Unisex Life Care Annuities Embedded in a Pay-As-You-Go Retirement System Affect Gender Redistribution?

How Do Unisex Life Care Annuities Embedded in a Pay-As-You-Go Retirement System Affect Gender Redistribution?

Role of Private Long-Term Care Insurance in Financial Sustainability for an Aging Society

Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits

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