Longevity Risk Management in Singapore’s National Pension System

Joelle H.Y. Fong, Olivia S. Mitchell, and Benedict S. K. Koh

Abstract —Although annuities are a theoretically appealing way to manage longevity risk, in the real world relatively few consumers purchase them at retirement. To counteract the possibility of retirees outliving their assets, Singapore’s Central Provident Fund, a national defined contribution pension scheme, has recently mandated annuitization of workers’ retirement assets. More significantly, the government has entered the insurance market as a public-sector provider for such annuities. This paper evaluates the money’s worth of life annuities and discusses the impact of the government mandate and its role as an annuity provider on the insurance market.

[Keywords: annuity, singapore, mortality, payouts, adverse selection, population, insurance, premium, retirees]