Improving Money’s Worth Ratio Calculations: The Case of Singapore’s Pension Annuities

34 Pages Posted: 16 Sep 2011 Last revised: 22 May 2012

See all articles by Joelle H. Fong

Joelle H. Fong

National University of Singapore

Jean Lemaire

University of Pennsylvania - Statistics Department

Yiu Kuen Tse

Singapore Management University - School of Social Sciences

Date Written: September 7, 2011

Abstract

This article contributes to a better understanding of the risks involved in a life annuity investment. We examine the distribution of weighted annuity benefits and assess various measures of dispersion such as the coefficient of variance. In particular, we quantify the standard deviation about the expected value, thereby extending the usefulness of the popular money’s worth framework for annuity valuation. The effort toward a more detailed and more accurate risk picture of investing in annuities enables retirees to differentiate among products that may appear seemingly uniform in terms of money’s worth, but vary widely in terms of their risk attributes.

Keywords: retirement, pensions, annuities, risk, money’s worth

Suggested Citation

Fong, Joelle H. and Lemaire, Jean and Tse, Yiu Kuen, Improving Money’s Worth Ratio Calculations: The Case of Singapore’s Pension Annuities (September 7, 2011). Available at SSRN: https://ssrn.com/abstract=1928323 or http://dx.doi.org/10.2139/ssrn.1928323

Joelle H. Fong (Contact Author)

National University of Singapore ( email )

469C BUKIT TIMAH ROAD, LKYSPP
SINGAPORE, Singapore 259771
Singapore

HOME PAGE: http://https://lkyspp.nus.edu.sg/our-people/faculty/fong-hung-yee-joelle

Jean Lemaire

University of Pennsylvania - Statistics Department ( email )

Wharton School
Philadelphia, PA 19104
United States

Yiu Kuen Tse

Singapore Management University - School of Social Sciences ( email )

469 Bukit Timah Road
Federal Building #02-05
Singapore, 259756
Singapore
+65 822-0257 (Phone)
+65 822-8081 (Fax)

HOME PAGE: http://staff.mysmu.edu/yktse/yktsehp.htm

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
134
Abstract Views
1,029
rank
229,114
PlumX Metrics