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

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.
Publication date: July 2018
ISBN: 9781484366837
$18.00
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Fiji , Insurance , Life-cycle model , Natural disasters , Pension , Small states

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