tag:blogger.com,1999:blog-19649274.post9090966196578264263..comments2024-03-29T12:03:50.891+05:30Comments on The Leap Blog: Designing the payout phase of the National Pension SystemAjay Shahhttp://www.blogger.com/profile/03835842741008200034noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-19649274.post-59197561125540225222016-12-08T23:14:10.727+05:302016-12-08T23:14:10.727+05:30The author argues that imposing annuity prices whi...The author argues that imposing annuity prices which ignores individual level mortality difference would create bias in favour of rich as they tend to live more.<br /><br />In order to remove the pro rich bias, survival probabilities need to be a function of income. As per my understanding, insurance company include current health report in their pricing. Including income as an input for calculation of survival probability is relatively unheard of.<br /><br />An easy and practical way is to incorporate the accumulated corpus as a proxy for rich/poor. This would be like a progressive annuity price system where large lumpsums are priced at higher rate. Anonymousnoreply@blogger.com