Abstract
This article examines how regulation, accounting transparency, and longevity risk awareness among pension plans have led to dramatic changes in risk management and governance in the U.K., and how they have made the U.K. the most active marketplace in the world for pension plan derisking. The article further discusses how many of these same catalysts for change are now arriving in the U.S., and how the U.S. defined benefit pension market is poised for a wave of de-risking activity.
With longevity risk analysis tools and research methods currently in use in the U.K. now being developed for the U.S. market, U.S. plan sponsors will soon have the resources they need to fully understand and quantify their risk. The article concludes that an understanding of longevity risk is the last missing piece in the puzzle for U.S. corporate pension plan sponsors to move more aggressively toward de-risking.
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