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What can history tell us about pensions

A current article in the magazine Professional Investor, 'Annuities: Lessons from the past and concerns from the future', discusses what, if anything we can learn from history about the pricing of modern annuities. Adrian Bell and Charles Sutcliffe discuss the current methods used to price annuities and warn that a shake up in the industry is needed if it is to cope with predicted demand for such products.

The authors also discuss their recent research into a form of pension, available in the middle ages, called a 'corrody'. A corrody has many common features with a modern annuity, the main difference being that the benefit was paid in kind - for instance in food and lodging; and that it could be purchased with a real estate transfer. The outcome of this work, forthcoming in the journal Explorations in Economic History, examines surviving evidence for the purchase of corrodies, and using modern pricing techniques, establishes that these were probably good business for the selling institutions.

For the full magazine article see: Professional Investor, Winter 2009/10, pp. 26-30. To read the research in full see: Adrian R. Bell and Charles Sutcliffe, ?Valuing medieval annuities: Were corrodies underpriced?',Explorations in Economic History (In press) DOI: http://dx.doi.org/10.1016/j.eeh.2009.07.002

Published 25 January 2010

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