Life Care Annuities (Lca) Embedded in a Notional Defined Contribution (Ndc) Framework

Pla-Porcel, Javier; Ventura-Marco, Manuel; Vidal‐Meliá, Carlos

doi:10.1017/asb.2015.27

Cited by 22 publications

(20 citation statements)

References 49 publications

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“…The difference between this model and the one found in Pla-Porcel et al (2016) is that the health status of retired pensioners is broken down into n levels depending on individual LTC needs and minimum pension benefits exist for both contingencies. We work with a multiple state transition model (Haberman and Pitacco, 1999;Pitacco, 2014), which is a random process model that describes a subject's movements between a set of various states: contributors (active) (a), retired (healthy) (r), retired (j ∈ {1, 2, .…”

Section: Author Orcidsmentioning

confidence: 99%

An NDC approach to helping pensioners cope with the cost of long-term care

Vidal‐Meliá

Ventura-Marco²,

Pla-Porcel³

2018

Journal of Pension Economics and Finance

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This paper explores a notional defined contribution (NDC) approach aimed at helping pensioners to cope with the cost of long-term care (LTC). It develops the necessary technicalities to fully integrate an LTC benefit, graded according to the annuitant's degree of disability, into a generic NDC retirement framework with a minimum pension benefit for both contingencies. It also discusses the policy implications of various issues that should be taken into account before any decision is made to put the model into practice. Finally, to enable policymakers to better understand how the proposal would function, the paper includes a realistic numerical example.

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Section: Author Orcidsmentioning

confidence: 99%

An NDC approach to helping pensioners cope with the cost of long-term care

Vidal‐Meliá

Ventura-Marco²,

Pla-Porcel³

2018

Journal of Pension Economics and Finance

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“…An LCA with degree-related benefits means that the amount paid depends on the annuitant's degree of disability. An enhanced pension annuity (EPA) is an LCA in which the uplifts are financed by a reduction-with respect to the basic pension-in the benefit paid while the pensioner is healthy [57][58][59][60][61][62].…”

Section: The Modelmentioning

confidence: 99%

A Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits

2018

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This paper develops a social insurance accounting model for a notional defined contribution (NDC) scheme combining retirement and long-term care (LTC) contingencies. The procedure relies on standard double-entry bookkeeping and enables us to compile a "Swedish" type actuarial balance sheet (ABS) following a framework equivalent to an open group approach. This methodology is suitable for reporting the system's solvency status and can show periodical changes in the system's financial position by means of an income statement. The information underpinning the actuarial valuation is based on events and transactions that are verifiable at the valuation date, without considering expected future trends. The paper also contains an illustrative example to make it easier for policymakers to understand the main advantages and difficulties of our proposal. The policy conclusions stress the need to properly report social insurance benefits to enhance transparency and sustainability and to improve decision-making because it is in the public interest to do so.

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“…In the literature, we find several theoretical proposals combining LTC and retirement pensions in the public system. The idea of embedding a public LTC insurance scheme in a notional defined contribution (NDC) framework has been examined: for instance, [25] develops a Swedish-type financial reporting statement and [26] looked into introducing life care annuities (LCAs). The same authors have also assessed the cost of converting retirement benefits into an LCA with graded benefits using a pre-existing public pay-as-you-go (PAYG) pension scheme [27].…”

Section: Introductionmentioning

confidence: 99%

Role of Private Long-Term Care Insurance in Financial Sustainability for an Aging Society

2020

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This work analyzes and quantifies the significance of private long-term care insurance for the elderly in protecting families from the increased expenses derived from dependency. We propose an economic and financial model for consumption and income deficit evolution. Survival/dependency are modeled by a Markov process with stochastic simulation techniques to obtain random variable distributions. Based on the Spanish survey of household finances data, Spanish families are classified using a cluster analysis for the wealth decumulation period. The conclusion is that, for a generic family, hiring long-term care insurance causes a significant reduction in the probability of lack of liquidity, the mean first time of lack of liquidity (if it occurs), and the mean present value of overall liquidity needs. It is also observed that there are important differences between these impacts on different groups of families. These results show that hiring long-term care insurance would considerably lower financial problems in the decumulation period.

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Life Care Annuities (Lca) Embedded in a Notional Defined Contribution (Ndc) Framework

Cited by 22 publications

References 49 publications

An NDC approach to helping pensioners cope with the cost of long-term care

An NDC approach to helping pensioners cope with the cost of long-term care

A Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits

Role of Private Long-Term Care Insurance in Financial Sustainability for an Aging Society

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