Life Annuity Products and Their Guarantees

image of Life Annuity Products and Their Guarantees

This publication helps policy makers to better understand annuity products and the guarantees they provide in order to optimise the role that these products can play in financing retirement. Product design is a crucial factor in the potential role of annuity products within the pension system, along with the cost and demand for these products, and the resulting risks that are borne by the annuity providers. Increasingly complex products, however, pose additional challenges concerning consumer protection. Consumers need to be aware of their options and have access to unbiased and comprehensible advice and information about these products.



Drivers of annuity product availability, design and sustainability

This chapter discusses three main drivers of annuity product design and availability: direct or indirect constraints within the context of the pension system; consumer demand for the product; and the sustainability of the product given the risks presented and the regulatory requirements in place. It draws on the experiences of different markets as examples. This discussion highlights the issues that policy makers should consider when putting in place a framework to ensure that the most essential aspects of annuity product design are given priority and to encourage the development of sustainable products which will adequately meet consumers’ needs.


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