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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.

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Ensuring suitable products for consumers

This chapter discusses what can be done by policy makers to help ensure that consumers get annuity products which are suitable for their needs and to ensure that appropriate consumer protections are in place. The increasing complexity and risk-sharing presented by different annuity products brings many challenges with respect to making sure that consumers are aware of the products available, can access the best product for their needs, and understand the products they are purchasing and the costs and risks that they entail. Policy makers must ensure that information is readily available and used by consumers, that products are clearly presented in a comprehensible and unbiased manner, and that product disclosures are transparent with respect to the product’s features, costs and risks and in order to help consumers choose the most suitable product for their needs.

English

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