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The other side of annuity
Old 09-21-2011, 04:28 PM   #1
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The other side of annuity

This is the other side of annuities...

"The problem is that returns on insurers' investment portfolios can't keep pace with the obligations they have accumulated from torrid sales of annuities and life policies over the past few years."



Insight: Fed's new rate policy twists insurers into a knot - Yahoo! News


It says it should not be a problem for awhile, but I bet the push to sell more has dimmed...
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Old 09-21-2011, 04:30 PM   #2
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Originally Posted by Texas Proud View Post
It says it should not be a problem for awhile, but I bet the push to sell more has dimmed...
...and the payouts on new annuities will decline even further.
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Old 09-22-2011, 02:04 PM   #3
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I would expect pension funds to suffer also.
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Old 09-22-2011, 02:14 PM   #4
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I would expect pension funds to suffer also.
True. The tide raises/lowers all/most boats.

OTOH, for those that get a cash settlement at retirement (such as a cash balance rather than a pension plan) the payout may be greater, since the assumpion is that you need to invest more (at lower interest rates) to have the same monthly benefit.
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Old 09-22-2011, 08:48 PM   #5
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Originally Posted by Texas Proud View Post
This is the other side of annuities...

"The problem is that returns on insurers' investment portfolios can't keep pace with the obligations they have accumulated from torrid sales of annuities and life policies over the past few years."



Insight: Fed's new rate policy twists insurers into a knot - Yahoo! News


It says it should not be a problem for awhile, but I bet the push to sell more has dimmed...
It might get to be cheaper for the insurers to hire hitmen to readjust the actuarial numbers. Bean counters are dangerous.
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