AEGON Global Pensions has issued its latest white paper 'Longevity and Pensions - protecting company pensions against longevity'.
Longevity and Pensions explores the impact of increasing longevity on pension systems and on companies in general before focusing specifically on solutions for protecting company-sponsored defined benefit plans.
The paper addresses the following questions.
- What are the sources of pension plan risk?
- How can a pension fund assess the longevity risk it is exposed to?
- How can a pension fund protect itself from longevity risk?
- What is a fair price for protection?
The paper also provides seven guidelines on implementing longevity swaps.
Martijn Tans, Director at AEGON Global Pensions, states ‘As people have come to enjoy longer lives, our pension systems have not been adjusted accordingly. Retirement ages and funding assumptions for pensions do not yet generally reflect the impact of longer-lived populations. As a result, state-run social plans, company-sponsored plans and private retirement savings are facing unprecedented challenges.’
Chris Madsen, Head of Risk Structuring and Transfer at AEGON states: ‘With longevity continuing to improve, it is important that pension plans and their company sponsors take another look at longevity risk – starting by looking at the risk around the best estimates of their future pension liabilities. Once companies have a good idea of how much risk their pension plan faces, they can take advantage of the indemnity hedges that are available in the market to mitigate the risk. It is now possible to protect a pension plan against longevity risk.’
Download a copy of the white paper Longevity and Pensions.
