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Guaranteed Annuity Options: Five Issues for Resolution

Published online by Cambridge University Press:  10 June 2011

C.D. O'Brien
C.D. O'Brien
Affiliation:
Centre for Risk and Insurance Studies, Nottingham University Business School, Jubilee Campus, Wollaton Road, Nottingham NG8 1BB, U.K. Tel: +044(0)115-846-6519; Fax: +044(0)115-846-6667; E-mail: christopher.obrien@nottingham.ac.uk
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Abstract

This paper considers five issues arising from guaranteed annuity options in pension policies issued by United Kingdom life assurance companies. These are the investment strategies for such options, the implications for bonuses on with-profits policies, the measurement of the solvency position and preparation of accounts of the companies concerned, and the policy debate on compulsory annuitisation. In particular, the paper highlights the impact of improving mortality on the value of options, comments on the House of Lords judgment in the Equitable Life case, and suggests additional disclosures in the accounts of life assurance companies.

Keywords

Guaranteed Annuity OptionsWith-Profits PoliciesSolvencyAccounting
Type
Sessional meetings: papers and abstracts of discussions
Information
British Actuarial Journal , Volume 8 , Issue 3 , 01 August 2002 , pp. 593 - 629
Copyright
Copyright © Institute and Faculty of Actuaries 2002

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