Design of comprehensive income products for retirement using utility functions
26 Pages Posted: 1 Jan 2020 Last revised: 4 May 2020
Date Written: May 2, 2020
An approach for designing a menu of comprehensive income products for retirement (CIPRs) is proposed and demonstrated. The approach entails for steps: defining and characterising member types based on selected attributes; specifying a utility function to capture the objectives and preferences of each member type; conducting analysis to identify and evaluate candidate investment and drawdown strategies, and hence select a product design; and communication to members. The latter uses attributes to describe the type of investor for which a product is designed, as well as setting out the key product features and the outcomes it may deliver.
Keywords: Retirement, pensions, portfolio construction, utility functions, investment products, behavioral
JEL Classification: D14, D81, D91, G11, G23
Suggested Citation: Suggested Citation