Self-insurance Against Natural Disasters: The Use of Pension Funds in Pacific Island Countries

Download or read book Self-insurance Against Natural Disasters: The Use of Pension Funds in Pacific Island Countries written by Mr.Si Guo and published by International Monetary Fund. This book was released on 2018-07-06 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: Pacific island countries are exposed to significant risks from natural disasters. As a disaster relief measure, Fiji allowed pre-retirement pension withdrawls in the wake of Cyclone Winston in 2016. Motivated by this policy action, we provide a normative analysis of the use of early pension withdrawals after disasters, by setting up a life-cycle saving model with myopic households facing large natural disaster shocks. The model demonstrates the key trade-off between building up sufficient retirement savings and ensuring the access to savings against natural disaster shocks, and sheds light on welfare implications of early pension withdrawals.