Annuities are a vital aspect of a growing number of reformed pension
systems around the world, and will be of increasing relevance in Europe
as reform of generous social security schemes gather pace. This paper
addresses the regulation of annuities, essential to ensure integrity of the
system, from three sides; prudential regulation of insurance companies, conduct
of business regulation of insurance companies and the regulation of annuities
within the overall pension system. We also consider some broader systemic
issues that may arise. It is highlighted that the main risks in annuities are traditionally
held to relate to errors in mortality and interest rate assumptions, but increasingly
credit and broader systemic risks are also coming to the fore. Thematically, we
suggest that research into the appropriate response of regulation to the dynamics
of competition among annuity providers and the implications of ageing warrant
particualr study. Further issues bearing directly on regulatory regimes are raised
by the Equitable Life debacle and the Japanese experience of life company failure.