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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26256
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| Title: | | The design of pension pay out options when the health status during retirement is uncertain  |
| Authors: | | Kifmann, Mathias |
| Issue Date: | | 2008 |
| Series/Report no.: | | CESifo working paper 2211 |
| Abstract: | | This paper examines the optimal design of pension plans when the health status during retirement is uncertain. Assuming that the health status affects both life expectancy and the marginal utility of consumption, choice between a lump-sum payment and an annuity can be welfare-enhancing if the health status is not observable by pension plans. This result holds if the marginal utility of consumption and life expectancy are negatively correlated. On equity grounds, a lump-sum option can be justified even if the marginal utility of consumption is independent of life expectancy. |
| Subjects: | | pensions lump-sum withdrawal annuities longevity |
| JEL: | | G23 H55 D82 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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