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SOCIAL SCIENCE RESEARCH NETWORK
EMPLOYEE BENEFITS, COMPENSATION & PENSION LAW ABSTRACTS
Sponsored by Pension Governance, LLC
Vol. 8, No. 41: November 21, 2007
Editor: PAMELA J. PERUN
Policy Director, Aspen Institute - Initiative on
Financial Security
PAMELA@PLANETNOW.COM
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Topic of This Issue:
Annuities
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T A B L E O F C O N T E N T S
"Tax Planning for Required Spousal Annuities Under Qualified
Retirement Plans and TSAs"
VORRIS J. BLANKENSHIP
Affiliation Unknown
"Annuities and Aggregate Mortality Uncertainty"
JUSTIN VAN DE VEN
National Institute of Economic and Social Research
(NIESR), University of Oxford - Department of Economics
MARTIN R. WEALE
National Institute of Economic and Social Research
(NIESR)
"Rational and Behavioral Perspectives on the Role of Annuities in
Retirement Planning"
JEFFREY R. BROWN
University of Illinois at Urbana-Champaign - Department
of Finance, National Bureau of Economic Research (NBER)
"Flexible Life Annuities"
ALEXIS DIRER
University of Grenoble 1
"Morbidity, Mortality, Health Expenditures and Annuitization"
KAM KI TANG
University of Queensland - School of Economics
JIE ZHANG
University of Queensland - School of Economics
"Shrinking Boomer Social Security Retirement Benefits"
FRANCINE J. LIPMAN
Chapman University - School of Law, Chapman University -
School of Business & Economics
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"Tax Planning for Required Spousal Annuities Under Qualified
Retirement Plans and TSAs"
Tax Notes, Vol. 117, No. 8, November 19, 2007
Contact: VORRIS J. BLANKENSHIP
Affiliation Unknown
Email: vblankenship@retirement-taxplanning.com
Auth-Page: http://ssrn.com/author=786188
Abstract: http://ssrn.com/abstract=1030502
ABSTRACT: Vorris J. Blankenship looks at the tax issues
surrounding receiving or waiving a spousal annuity.
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"Annuities and Aggregate Mortality Uncertainty"
WEF Working Paper No. 0027
Contact: JUSTIN VAN DE VEN
National Institute of Economic and Social Research
(NIESR), University of Oxford - Department of
Economics
Email: jvandeven@niesr.ac.uk
Auth-Page: http://ssrn.com/author=242775
Co-Author: MARTIN R. WEALE
National Institute of Economic and Social Research
(NIESR)
Email: M.WEALE@NIESR.AC.UK
Auth-Page: http://ssrn.com/author=172835
Full Text: http://ssrn.com/abstract=1026335
ABSTRACT: This paper explores the effect of aggregate mortality
risk on the pricing of annuities. It uses a two-period model; in
the second period people face a constant but initially unknown
risk of death. Old people can either carry the aggregate
emortality risk for themselves or buy annuities which are sold by
young people. A market-clearing price for such annuities is
established. It is found that old people would, given the choice,
decide to carry a considerable part of aggregate mortality risk
for themselves.
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"Rational and Behavioral Perspectives on the Role of Annuities in
Retirement Planning"
NBER Working Paper No. W13537
Contact: JEFFREY R. BROWN
University of Illinois at Urbana-Champaign -
Department of Finance, National Bureau of Economic
Research (NBER)
Email: brownjr@uiuc.edu
Auth-Page: http://ssrn.com/author=155077
Full Text: http://ssrn.com/abstract=1024140
ABSTRACT: This paper discusses the role of annuities in
retirement planning. It begins by explaining the basic theory
underlying the individual welfare gains available from
annuitizing resources in retirement. It then contrasts these
findings with the empirical findings that so few consumers behave
in a manner that is consistent with them placing a high value on
annuities. After reviewing the strengths and weaknesses of the
large literature that seeks to reconcile these findings through
richer extensions of the basic model, this paper turns to a
somewhat more speculative discussion of potential behavioral
stories that may be limiting demand. Overall, the paper argues
that while further extensions to the rational consumer model of
annuity demand are useful for helping to clarify under what
conditions annuitization is welfare-enhancing, at least part of
the answer to why consumers are so reluctant to annuitize will
likely be found through a more rigorous study of the various
psychological biases that individuals bring to the annuity
decision.
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"Flexible Life Annuities"
CESifo Working Paper Series No. 2125
Contact: ALEXIS DIRER
University of Grenoble 1
Email: direr@ens.fr
Auth-Page: http://ssrn.com/author=359910
Full Text: http://ssrn.com/abstract=1022508
ABSTRACT: Annuity contracts typically deliver a stream of income
at a predetermined level in order to insure against the risk of
longevity. This paper explores whether flexible annuities, which
give subscribers the possibility to choose between different
levels for their annuities, may be welfare enhancing. In the case
where agents gradually discover their actual probability of
survival, a predetermined and "one-size-fits-all" annuity plan is
optimal. If an expenditure risk is added along with the longevity
risk, a flexible annuity plan is better even though the
consumption path cannot be isolated from uninsured expenses
anymore.
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"Morbidity, Mortality, Health Expenditures and Annuitization"
CESifo Working Paper Series No. 2086
Author: KAM KI TANG
University of Queensland - School of Economics
Email: kk.tang@uq.edu.au
Auth-Page: http://ssrn.com/author=762536
Contact: JIE ZHANG
University of Queensland - School of Economics
Email: j.zhang@economics.uq.edu.au
Auth-Page: http://ssrn.com/author=466742
Full Text: http://ssrn.com/abstract=1014024
ABSTRACT: In this paper we explore the implication of a morbidity
risk for the relationship between longevity and annuitization. We
divide old-age life into two periods with uncertain survival from
the end of the first to the end of the second. We show that a
rise in the survival rate causes different patterns of change in
annuitization, depending on the initial survival rate. When the
initial survival rate is low (high), there is full (partial)
annuitization. There is thus an inverse relationship between
longevity and annuitization.
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"Shrinking Boomer Social Security Retirement Benefits"
American Bar Association - Tax News Quarterly, Fall 2007
Contact: FRANCINE J. LIPMAN
Chapman University - School of Law, Chapman
University - School of Business & Economics
Email: lipman@chapman.edu
Auth-Page: http://ssrn.com/author=334178
Full Text: http://ssrn.com/abstract=1029763
ABSTRACT: In 2008, the oldest of 78 million baby boomers will
celebrate their 62nd birthdays. Before they blow out their
birthday candles, they will have considered and likely decided
whether to elect to take early Social Security retirement
benefits (SSRBs). Recent and evolving changes in the "normal
retirement age" under Social Security, Medicare premiums and
increased exposure to income tax costs have reduced the net cash
flow many senior boomers will enjoy from SSRBs. Because of the
overall lack of transparency in the Social Security benefits
formula and the complex interplay of continued work, Medicare,
taxes, and the various timing-options, many boomers are unable to
make informed decisions about critical retirement matters. This
article presents these issues to assist in making informed
retirement decisions.