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Risks 2015, 3(4), 515-542; doi:10.3390/risks3040515

The Impact of Guarantees on the Performance of Pension Saving Schemes: Insights from the Literature

Department of Insurance Economics and Risk Management, Friedrich-Alexander University Erlangen-Nürnberg (FAU), Lange Gasse 20, 90403 Nürnberg, Germany
Academic Editor: Nadine Gatzert
Received: 13 July 2015 / Accepted: 16 November 2015 / Published: 20 November 2015
(This article belongs to the Special Issue Life Insurance and Pensions)
View Full-Text   |   Download PDF [620 KB, uploaded 20 November 2015]

Abstract

Guarantees are often seen as the key characteristics of pension saving products, but securing them can become costly and is of central relevance especially in the course of the current low interest rate environment. In this article, we deal with the question of how costly the typical types of guarantees are, in the sense that they reduce a pension saving scheme’s financial performance over time. In this context, we aim to provide a presentation of insights from selected literature studying the impact of point-to-point guarantees and cliquet-style interest rate guarantees on the performance of pension contracts. The comparative analysis emphasizes that, in most cases, guarantee costs are not negligible with regard to a contract’s financial performance, especially compared to benchmarks, and that customers knowingly opt for such guarantees (or not) is, thus, indispensable. To further investigate the willingness-to-pay for guarantees in life insurance is an area for future research, in particular for innovative contract design. View Full-Text
Keywords: life insurance; pension saving schemes; guarantees; performance life insurance; pension saving schemes; guarantees; performance
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Bohnert, A. The Impact of Guarantees on the Performance of Pension Saving Schemes: Insights from the Literature. Risks 2015, 3, 515-542.

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