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Asia-Pacific Journal of Risk and Insurance

The Official Journal of the Asia-Pacific Risk and Insurance Association

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

Joelle H. Fong / Jean Lemaire
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  • Department of Statistics, Wharton School, 400 JMHH 3730 Walnut Street, Philadelphia, PA 19194-6340, USA
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/ Yiu K. Tse
Published Online: 2014-03-04 | DOI: https://doi.org/10.1515/apjri-2013-0027


This paper contributes to a better understanding of the risks involved in a life annuity investment. We study the full distribution of weighted annuity benefits and quantify risk measures such as dispersion and skewness, thereby extending the usefulness of the popular money’s worth valuation framework for life annuities. Using data from pension annuities in Singapore, we also introduce several risk measures that might appeal to less financially sophisticated retirees. A more detailed and accurate picture of the risk of investing in life annuities emerges, enabling prospective annuitants 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: annuities; money’s worth ratio; risk measures


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About the article

Published Online: 2014-03-04

Citation Information: Asia-Pacific Journal of Risk and Insurance, Volume 8, Issue 1, Pages 1–26, ISSN (Online) 2153-3792, ISSN (Print) 2194-606X, DOI: https://doi.org/10.1515/apjri-2013-0027.

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