Seventh International Longevity Risk and Capital Markets Solutions Conference was held in Frankfurt from 8th to 9th September 2011. Pension and finance experts came from all over the world to one more time discuss the matter of enhanced longevity risk and instruments necessary implement by the pension companies and governments to lower the risk of retirement funds becoming insufficient.
Longevity risk represents the risk caused by the longer life expectancy that puts extra weight on pension funds and retirement plans because of the longer payment periods that it was planned. This risk represents a growing problem for the pension plans and insurance companies especially if we consider the new forecast that just in UK more than 10 million people will probably live to see their 100 birthday.
Dr. David Blake, Professor of Pension Economics and Director of the Pensions Institute at Cass Business School, and chair of the conference, said: "Longevity risk is an increasingly important risk to recognize, quantify and manage for both pension plan and annuity providers, as well as for governments and individuals. Getting the right trend improvements in life expectancy is the key both to managing this risk and to creating an asset class acceptable to investors to buy into"
But, not only governments and insurance companies are worried by the longevity risk. More and more pensioners are worried that they might outlive their pension plans. The experts at UK Pensions advisory service recommends to consider the longevity insurance to neutralize the longevity risk. This type of insurance is bought later in retirement life and usually paid out between the age of 80 and 85. This insurance guarantee income later in life for those who are worried that they will run out of pension income in their old age. The advantage of this product is that it is often less expensive that the standard pension annuity and in the same time it ensures a better return rates that the usual pension plan. However, the risk of this type of pension funding is that an individual has no return and no payouts if he does not live to receive all annuities.
One way or the other, this Seventh Longevity Conference has proved that longevity is becoming more serious risk for pension politics and retirement companies that it has been considered so far and that longevity management is becoming an important string in the chain of pension policy in any economy today.
Longevity risk represents the risk caused by the longer life expectancy that puts extra weight on pension funds and retirement plans because of the longer payment periods that it was planned. This risk represents a growing problem for the pension plans and insurance companies especially if we consider the new forecast that just in UK more than 10 million people will probably live to see their 100 birthday.
Dr. David Blake, Professor of Pension Economics and Director of the Pensions Institute at Cass Business School, and chair of the conference, said: "Longevity risk is an increasingly important risk to recognize, quantify and manage for both pension plan and annuity providers, as well as for governments and individuals. Getting the right trend improvements in life expectancy is the key both to managing this risk and to creating an asset class acceptable to investors to buy into"
But, not only governments and insurance companies are worried by the longevity risk. More and more pensioners are worried that they might outlive their pension plans. The experts at UK Pensions advisory service recommends to consider the longevity insurance to neutralize the longevity risk. This type of insurance is bought later in retirement life and usually paid out between the age of 80 and 85. This insurance guarantee income later in life for those who are worried that they will run out of pension income in their old age. The advantage of this product is that it is often less expensive that the standard pension annuity and in the same time it ensures a better return rates that the usual pension plan. However, the risk of this type of pension funding is that an individual has no return and no payouts if he does not live to receive all annuities.
One way or the other, this Seventh Longevity Conference has proved that longevity is becoming more serious risk for pension politics and retirement companies that it has been considered so far and that longevity management is becoming an important string in the chain of pension policy in any economy today.
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