Includes bibliographical references / This dissertation intends to shed light on open-membership medical scheme benefit design in South Africa. This will be done by analysing the benefit design of 118 benefit options, so as to provide an overview of the structure and nature of the benefit offerings available in the market in 2014. In addition, affordability of these benefit options was analysed in order to identify whether or not there exist connections between the benefits on offer and the price of cover. This paper will argue that at present, the large number of benefit options available in the market, the lack of standardisation between benefit options, together with the mosaic of confusing terminology employed in scheme brochures, creates a highly complex environment that hampers consumer decision making. However, this implicit complexity was found to be necessary owing to the incomplete regulatory environment surrounding medical schemes. The findings of this investigation show that benefit design requires significant attention in order to facilitate equitable access to cover in South Africa.

Essay 1 (with Juha Alho and Edward Palmer):  All around the world, public pension schemes are moving in the direction of non-financial (NDC) and financial defined contribution (DC) schemes.  Both rely on accurate projections of life expectancy in the creation of annuities. Accurate projections are critical for system stability, individual utility and inter-generational welfare. This paper suggests a path-breaking innovation that changes the perspective from the Lee-carter (LC) family of trend models which assume a constant rate of change in mortality over time. Our approach is to project the cohort life expectancy on basis of the specific cohort rate of change in mortality. This relaxes the strong trend assumption underlying the LC model, which is the reason why LC model does not work well in the phase of accelerating or decelerating mortality. We use unisex mortality data for $8$ countries to test the performance of our approach both ex-post and ex-ante. The ex-post experiment shows that our approach generally performs better when the rate of change in mortality is accelerating and performs as well as LC model when the rate of change is time-invariant. The ex-ante experiment, on the other hand, shows that our model almost always delivers higher projection of remaining life expectancy than the LC model for the more recent cohorts, which is consistent with the ex-post experimental results. / Essay 2:  Due to the systematic underestimation of cohort life expectancy, NDC pension schemes face a financial risk that can leads to inter-generational unfairness, given the current practice. This paper proposes an alternative method of computing annuity to address this problem. The proposal is to adjust the annuity based on re-estimations of the remaining life expectancy at intervals after retirement, but only up to a ceiling age. The scheme is assessed using 208 cohort annuity pools from eight sample countries. This experiment shows that the proposed scheme succeeds in reducing the inter-generational unfairness for 60-80% of the cohort annuity pools, compared to current practice of fixing the annuity at age 65. Because the adjustment is borne by the relatively large group of younger persons, the per capita change in utility is rather small assuming risk neutrality. / Essay 3:  This paper studies how the incentive to retire in a DC (NDC) scheme is influenced by engaging private information on life expectancy. This is an important question since the decisions made under the two scenarios, optimizing using the private life expectancy or the cohort average made available by the pension provider, create different welfare and financial outcomes. The analytical framework is a standard life-cycle model, accounting for monetary gain from work and non-monetary gain from leisure. The unique feature here is that the individual life expectancy is an explicit driver of disutility of work. The theoretical result is that prevailing private information of a longer-than-average life expectancy can lead to both advancing and delaying retirement, depending on other factors determining utility. The numerical example using Swedish data proves the theoretical results and suggests a rather small average impact on the choice of retirement by engaging private information of life expectancy. / Essay 4:   Pensions in the increasingly popular Notional Defined Contribution (NDC) Pay-as-You-Go Schemes are granted based on cohort-specific life expectancy, regardless socioeconomic differences. This risks perverse intra-generational and unintended inter-generational transfers. This paper introduces an alternative with separate annuity pools for different socioeconomic classes. Using unique Swedish data and the Swedish NDC pension system as an example, the analysis shows a significant gap in life expectancy between socioeconomic classes defined by occupation. In the Swedish context, this implies a perverse transfer of 5% of the pension capital from the manual workers to the non-manual workers, which can be abolished by using the group plan. In addition, the group plan also lessens the risk of inter-generational transfers resulting from the gap in life expectancy.