Annuities and their Derivatives: The Recent Canadian Experience

Moshe A. Milevsky and Ling-wu Shao

in Securing Lifelong Retirement Income

Published in print May 2011 | ISBN: 9780199594849
Published online September 2011 | e-ISBN: 9780191729119 | DOI:
Annuities and their Derivatives: The Recent Canadian Experience

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This chapter surveys recent developments within the Canadian ‘income annuity’ marketplace. The chapter starts by computing the Money's worth ratio (MWR) using a unique dataset which includes a decade of Canadian annuity payouts. It then moves on to discuss the Guaranteed Lifetime Withdrawal Benefit (GLWB) product which has recently become available in Canada. This important innovation is extremely popular and shares many characteristics with a conventional income annuity. Finally, it concludes with thoughts on the optimal product allocation within the context of the Canadian retirement portfolio.

Keywords: Canada; single premium immediate annuity; guaranteed living withdrawal benefit; taxation; money's worth ratio; mortality; financial crisis; variable annuity; systematic withdrawal plan; pensions

Chapter.  5521 words.  Illustrated.

Subjects: Pensions

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