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Mortality surplus in an annuity fund

A

ActuaryEye

Member
Most PPFMs that I have come across specify that mortality surpluses from annuitant mortality experience in an annuity fund belongs to policyholders. These funds are 90:10. Is there a specific reason why shareholders don’t participate in the mortality profit? I thought shareholder would also be entitled to a share in the surpluses since they also bear the risk if annuitants live longer than expected (mortality lighter than expected).
 
Yes, you are right, in a traditional 90:10 fund, surplus is split - 90% to policyholders and 10% to shareholders. And this comes through via the bonus system. Can I just check whether it is still a 90:10 structure when the policy becomes an annuity? You may also want to consider whether there has historically been approved reallocation of surplus between shareholder and policyholders.
 
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