Chapter

Money's worth calculations

Edmund Cannon and Ian Tonks

in Annuity Markets

Published in print October 2008 | ISBN: 9780199216994
Published online January 2009 | e-ISBN: 9780191711978 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780199216994.003.0006
Money's worth calculations

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This chapter surveys the evidence on whether annuities are fairly priced. It explains the money's worth calculation of annuities, and presents evidence on the money's worth in the UK and in other countries. While there is strong evidence to suggest that annuities are priced slightly higher than would be suggested by actuarial considerations, estimated mark-ups (sometimes called loadings) do not seem excessive compared with the cost of other financial services. There is little evidence to suggest that annuities are over-priced.

Keywords: fair-pricing; cacluation of annunities; loadings; over-priced

Chapter.  6807 words.  Illustrated.

Subjects: Pensions

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