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The effect of retirement taxation rules on the value of guaranteed lifetime withdrawal benefits

dc.contributor.authorUlm, Eric
dc.date.accessioned2018-08-02T22:03:17Z
dc.date.accessioned2022-07-11T23:01:00Z
dc.date.available2018
dc.date.available2018-08-02T22:03:17Z
dc.date.available2022-07-11T23:01:00Z
dc.date.copyright2018
dc.date.issued2018
dc.description.abstractWe examine the value of GLWB options embedded in variable annuities in two different tax regimes. The New Zealand system taxes investment income when it is earned whereas the system in the US defers taxes on annuity investment income until it is paid out. We examine the effects of these tax differences on the charges collected by the issuer as well as on the value of the contract to the policyholder. We find that the issuer’s charges are typically lower (higher) in the NZ tax regime when the expected fund earnings are low (high) or the fund volatility is high (low). On the other hand, the value to the policyholder is always lower in the NZ tax regime due to the earlier tax payments. We also find that the value of the GLWB in the NZ tax regime is nearly always below the value of an ordinary payout annuity with the same tax rules.en_NZ
dc.formatpdfen_NZ
dc.identifier.urihttps://ir.wgtn.ac.nz/handle/123456789/20829
dc.language.isoen_NZ
dc.publisherTe Herenga Waka—Victoria University of Wellingtonen_NZ
dc.relation.ispartofseriesSEF Working Paper: 08/2018en_NZ
dc.rights.rightsholderhttps://www.victoria.ac.nz/sefen_NZ
dc.subjectGLWBen_NZ
dc.subjectRetirementen_NZ
dc.subjectTaxationen_NZ
dc.subjectVariable Annuitiesen_NZ
dc.titleThe effect of retirement taxation rules on the value of guaranteed lifetime withdrawal benefitsen_NZ
dc.typeTexten_NZ
vuwschema.contributor.unitSchool of Economics and Financeen_NZ
vuwschema.subject.anzsrcfor140219 Welfare Economicsen_NZ
vuwschema.subject.anzsrcforV2380119 Welfare economicsen_NZ
vuwschema.type.vuwWorking or Occasional Paperen_NZ

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