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TABLE 1
ANNUITY VERSUS LIFE INSURANCE PAYOUTS
(MILLIONS OF 1994 DOLLARS)

 Year  (1)
Life Insurance Payouts		  (2)
Annuity Payouts		  (2)/[(1)+(2)]
Ratio
1940 $26,355 $1,864 0.07
1945 20,194 1,779 0.08
1950 20,947 2,012 0.09
1955 27,015 2,772 0.09
1960 36,514 4,158 0.1
1965 47,630 6,120 0.11
1966 49,760 6,557 0.12
1967 51,932 7,095 0.12
1968 53,827 7,474 0.12
1969 54,976 7,758 0.12
1970 54,767 8,102 0.13
1971 54,384 8,513 0.14
1972 56,574 9,323 0.14
1973 57,717 10,130 0.15
1974 54,450 10,080 0.16
1975 52,018 10,102 0.16
1976 52,627 11,517 0.18
1977 51,868 12,889 0.2
1978 51,748 13,335 0.2
1979 50,734 15,418 0.23
1980 50,118 18,348 0.27
1981 51,331 19,611 0.28
1982 54,064 19,692 0.27
1983 57,021 20,196 0.26
1984 60,690 25,566 0.3
1985 62,367 29,300 0.32
1986 61,710 30,629 0.33
1987 61,454 31,715 0.34
1988 60,706 32,173 0.35
1989 60,777 35,141 0.37
1990 63,277 36,933 0.37
1991 59,810 39,838 0.4
1992 60,733 39,662 0.4
1993 61,176 41,356 0.4
Source: American Council on Life Insurance, 1994 Fact Book, p. 42, and author's calculation.

 

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TABLE 2
LIFE INSURANCE COMPANIES' ANNUITY PREMIUM INCOME
(MILLIONS OF 1994 DOLLARS)
Year Individual Annuity Group Annuity Total Annuity Premiums
1951 $1,209 $4,272 $5,481
1952 1,377 4,722 6,099
1953 1,433 5,152 6,585
1954 1,296 5,370 6,666
1955 1,317 5,810 7,127
1956 1,254 5,796 7,050
1957 1,177 6,254 7,431
1958 1,180 6,127 7,307
1959 1,203 6,411 7,614
1960 1,268 5,451 6,719
1961 1,399 5,471 6,870
1962 1,478 5,785 7,263
1963 1,871 6,572 8,443
1964 2,129 7,018 9,147
1965 2,580 8,060 10,640
1966 2,756 8,268 11,024
1967 3,024 8,836 11,860
1968 3,307 9,448 12,755
1969 3,455 11,747 15,202
1970 3,669 10,553 14,222
1971 4,420 13,559 17,979
1972 5,176 14,347 19,523
1973 5,598 17,018 22,616
1974 5,788 17,486 23,274
1975 7,343 20,677 28,020
1976 9,677 26,712 36,389
1977 11,140 25,505 36,645
1978 10,131 27,033 37,164
1979 10,164 26,480 36,644
1980 11,331 29,035 40,366
1981 16,788 28,206 44,994
1982 23,353 29,887 53,240
1983 20,850 24,629 45,479
1984 22,418 38,756 61,174
1985 28,793 45,493 74,286
1986 $35,307 $77,861 $113,168
1987 44,039 71,624 115,663
1988 54,887 74,581 129,468
1989 59,089 78,444 137,533
1990 60,845 85,487 146,332
1991 56,220 78,251 134,471
1992 64,800 75,309 140,109
1993 78,957 81,491 160,448
Source: American Council on Life Insurance data and author's calculations.

 

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TABLE 3
LIFE INSURANCE COMPANY RESERVES FOR ANNUITIES
AND LIFE INSURANCE POLICIES (MILLIONS OF 1994 DOLLARS)
Year Individual Annuity Group Annuity Supplemental Annuity Life Insurance
1967 $25,508 $116,300 $15,465 $444,469
1968 26,694 121,171 15,384 447,073
1969 25,651 126,128 14,810 444,662
1970 26,564 129,289 14,241 441,238
1971 28,031 139,607 14,299 445,211
1972 30,366 152,373 14,003 455,036
1973 31,671 153,036 13,581 449,880
1974 31,618 147,019 12,562 426,009
1975 34,296 159,786 11,798 413,649
1976 39,999 182,328 11,494 412,735
1977 46,330 190,061 11,167 409,369
1978 52,442 224,436 10,806 404,284
1979 55,363 237,858 10,183 384,389
1980 56,768 252,717 9,386 356,109
1981 63,299 262,653 8,751 337,690
1982 78,378 294,906 8,689 328,539
1983 96,276 330,137 8,745 329,012
1984 109,879 363,388 8,323 322,440
1985 133,646 417,640 8,188 325,066
1986 163,772 480,935 8,494 340,718
1987 203,647 511,994 8,818 360,516
1988 242,971 543,920 9,200 375,954
1989 286,545 566,810 9,495 387,706
1990 319,874 584,803 9,659 395,437
1991 357,231 596,454 9,706 404,841
1992 402,096 591,271 9,912 425,056
1993 450,632 617,236 10,206 447,457
Source: American Council on Life Insurance data and author's calculations.

 

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TABLE 4
GROUP ANNUITIES AND PRIVATE PENSION
ARRANGEMENTS, 1958-1993

Year 1958 1963 1968 1973 1978 1983 1988 1993
Group annuities 3,925 4,860 7,310 10,210 15,665 23,165 38,165 44,850
Terminal funded group plans 290 95 200 285 1,740 2,065
Individual policy pension trusts 605 725 1,100 1,705 1,955 1,880 1,950 1,735
Keogh plans 295 465 495 435 320
Tax-sheltered annuities 675 1,400 2,455 4,255 5,805
IRAs 960 2,630 5,085 4,710
Other 395 475 430 645 970 1,515 2,430 1,195
TOTAL 4,925 6,060 9,130 13,625 21,615 32,425 54,060 60,680
Source: Author's tabulations from various issues of Life Insurance Fact Book.
Note: Each entry shows the number of individuals (in thousands) covered in group annuity contracts of various types.

 

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TABLE 5
TRENDS IN PENSION PLANS, PARTICIPANTS, AND
CONTRIBUTIONS, 1975-1991
Year Plans Participants Contributions
 Defined Contribution Plans
1975 207.7 11.5 $29.50
1976 246 13.5 30.9
1977 281 15.2 32.5
1978 314.6 16.3 35
1979 331.4 18.3 35.4
1980 340.8 19.9 35.4
1981 378.3 21.7 38.7
1982 419.5 24.6 40
1983 426.6 29.1 44.9
1984 435.4 32.9 51.8
1985 462 35 61.3
1986 545 36.7 66
1987 570 38.3 66
1988 584 37 68
1989 599 36.5 73.2
1990 599.2 38.1 71.9
1991 597.5 38.6 73.7
 Defined Benefit Plans
1975 103.3 33 $55.80
1976 114 34.2 62.1
1977 121.7 35 63.8
1978 128.4 36.1 52.5
1979 139.5 36.8 69.3
1980 148.1 38 64.1
1981 167.3 38.9 64.1
1982 175 38.6 62.2
1983 175.1 40 57.6
1984 168 41 56.3
1985 170.2 39.7 48.4
1986 172.6 40 37.6
1987 163.1 40 32.5
1988 146 40.7 27.6
1989 132.5 40 24.9
1990 113.1 38.8 21.8
1991 101.8 39 27.4
Source: Data are drawn from U.S. Department of Labor (1995), Private Pension Plan Bulletin (Washington, D.C.: U.S. Department of Labor, Office of Research and Economic Analysis).
Note: The number of plans is measured in thousands, participants in millions, and contributions in billions of 1989 dollars, converted from current dollars, using the consumer price index.

 

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TABLE 6
INDIVIDUAL ANNUITIES IN FORCE AND PREMIUMS, 1977-1994

   Number of Annuity Policies  Annuity Premium Payments
   Fixed Variable Fixed Variable
1977 3.68 0.67 n/a n/a
1978 4.24 0.69 n/a n/a
1979 4.49 0.72 n/a n/a
1980 5.4 0.76 $9.00 $1.80
1981 6.11 0.8 14.7 1.6
1982 7.69 0.9 20 3.1
1983 8.55 1.03 17.9 4.5
1984 9.47 1.2 20 2.9
1985 10 1.46 26.2 4.1
1986 10.88 1.91 31.1 4.1
1987 12.07 2.29 37.8 6.5
1988 13.34 2.47 48.9 6.3
1989 14.16 2.73 51.4 7.2
1990 16.31 2.91 54.4 6.8
1991 17.34 2.84 47.9 8.7
1992 19.29 3.93 48.6 16.9
1993 21.5 5.25 41 30.8
1994 n/a n/a 55 40
Source: Columns 1 and 2, American Council on Life Insurance data; statistics exclude supplementary contracts. Columns 3 and 4, Bernstein Research.
Note: Data on annuity policies are in millions. Dollar values are billions of 1994 dollars.

 

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TABLE 7
LIFE INSURANCE COMPANY VARIABLE ANNUITY
RESERVES (MILLIONS OF 1994 DOLLARS)
Year Group Policies Individual Policies
1967 $5,199 $71
1968 7,965 158
1969 9,274 319
1970 9,223 581
1971 11,069 1,311
1972 12,790 2,239
1973 13,400 2,849
1974 12,303 2,960
1975 15,911 4,377
1976 18,184 5,958
1977 19,042 6,431
1978 18,230 7,094
1979 15,976 8,144
1980 17,920 8,673
1981 17,683 9,445
1982 17,547 10,481
1983 19,617 13,252
1984 22,449 14,370
1985 25,589 20,559
1986 30,166 28,105
1987 30,726 35,612
1988 33,619 41,469
1989 37,275 49,867
1990 38,239 54,141
1991 41,170 57,984
1992 43,239 79,512
1993 56,052 114,534
Source: American Council on Life Insurance data and author's calculations.

 

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TABLE 8
RATES OF RETURN ON TAX-DEFERRED
AND TAXABLE INVESTMENTS
 Time Horizon
Rate of
Return		 10 years 20 years 30 years 40 years
 Marginal Tax Rate = 28 %
3% 0.90% 3.30% 7.30% 12.60%
5% 2.4 8.9 19 32.7
7% 4.5 16.8 35.8 61.4
9% 7.3 26.8 57.3 99.4
 Marginal Tax Rate = 39.6%
3% 1.10% 4.20% 9.30% 16.30%
5% 2.9 11.4 25.4 45.2
7% 5.6 22.2 49.9 90.3
9% 9.3 36.5 83.7 155.8
 Marginal Tax Rate = 20%
3% 0.70% 2.60% 5.50% 9.40%
5% 1.8 6.7 14 23.4
7% 3.4 12.4 25.5 42.2
9% 5.5 19.4 39.6 65.5
Source: Author's calculations.
Note: Each entry shows the value of 100 * {1 + (1 - ) * [erT - 1]}/er(1- )T. The numerator reflects the value of an asset that accumulates at a pre-tax rate of return of r, for a period of T years, and is taxed at maturity at a rate on the difference between its maturity value and the initial investment. The denominator is the value of an asset that grows at an after-tax rate of return, r(1 - ), for T years.

 

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