A New Age of Models and Management for Longevity Risk

Abstract

Longevity risk has become a crucial agenda item for organizations wherever pension obligations intersect with the realities of aging populations and the concomitant rise in life expectancy observed in many societies. Plan sponsors are thus challenged to develop robust views of their pension liabilities and set proper value assumptions for them. New models and techniques allow the right data to be analyzed with greater efficacy to set more accurate assumptions, while at the same time market and regulatory developments, including the rise of pension buy-outs and annuities, are having an effect on the issue of longevity risk, especially in the U.K. and the U.S.