Enhanced annuities as a complement to the public retirement pension: analysis of their implementation in Spain [written in Spanish]

Abstract

Enhanced annuities are non-deferred annuities that, by considering risk factors of the insured person in addition to their age, can provide a greater periodic pay-out than that of standard annuities. Given current demographic trends and the associated longevity risk, enhanced annuities, widely introduced in the United Kingdom, can become an important market niche in countries where their sale levels are low or non-existing, as is the case of Spain. In this work, we describe some key aspects of enhanced annuities. A quantitative analysis is also carried out. To do so, we focus on determining the pay-outs to be received, based on the consideration of a mortality table fitted to the annuitant's life expectancy. Finally, the main drivers of and barriers to the demand and supply of this product are exposed, considering the particular situation of Spain.