The book began by posing three basic questions. What should the policy toward distributions from individual accounts be – in particular, how restrictive should the rules applying to annuities or distributions in other forms be? Should annuities, if they are mandatory, be supplied by the public or the private sector? How can markets for voluntary annuities be made more efficient, and their effective regulation ensured? This concluding chapter proposes answers for each of them.

POLICY ISSUES WITH EITHER PUBLIC OR PRIVATE PROVISION OF MANDATORY ANNUITIES

Distributions before retirement and bequests

Chapter 4 noted that countries that have adopted individual accounts, whether to complement or replace an existing pay-as-you-go (PAYG) system, have taken the position that individual accounts do not enjoy the same legal status as holdings of other financial assets. Specifically, they are not endowed with the same complement of property rights. Instead, existing individual accounts systems treat individual accounts exclusively as a source of income for retirement. In virtually no country are withdrawals allowed while the account holder is still alive, whether they are intended to finance an education or the purchase of a house, pay medical bills, or tide the account holder over a spell of unemployment. In Chile, the balance in individual accounts at the death of the holder is inheritable, but only under certain conditions.