Longevity insurance annuities: China adopts a benefit innovation from the past

Authors:
Tianhong Chen
John A. Turner

Issue:
Volume 68 (2015), Issue 2

Link to full article:
https://doi.org/10.1111/issr.12063

Longevity insurance annuities are deferred annuities that begin payment at advanced older ages, such as at age 80. Such annuities would benefit some older retirees who have drawn down their savings, but the private sector has problems in providing them. Originally, social insurance old-age benefits programmes in some countries were structured as longevity insurance programmes, with 50 per cent or less of those entering the workforce surviving to receive the benefits. Over time, however, as life expectancy has improved, the benefits these programmes provide have slowly transformed into benefits that most people entering the workforce ultimately receive. This article argues that the reintroduction of longevity insurance benefits as part of social insurance old-age benefit programmes could be an important policy innovation, in particular because this benefit is generally not provided by the private sector. China has introduced longevity insurance benefits as part of its social insurance system, offering a model for other countries, particularly those providing modest social insurance old-age benefits.

Topics:
Old-age pensions
Keywords:
annuity
old age risk
old-age benefit
Countries:
China