Longevity Risk

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Longevity Risk

The risk that an individual will outlive his/her retirement savings. For example, if one's retirement consists of personal savings and a fixed-term annuity, the possibility exists that the money will run out before one dies. The risk is especially large if one has health problems in one's old age. One may mitigate longevity risk in a number of ways. For example, one may purchase investment vehicles such as a lifetime annuity, which guarantees payments for the remainder of one's life, or longevity insurance, which provides a lump sum benefit if one lives to a certain age.
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Second, the government can issue longevity bonds (also known as survivor bonds), which would allow life insurance companies to hedge longevity risks more effectively.
SM BONDS--A NEW PRODUCT FOR MANAGING LONGEVITY RISK
"The proposed tax deductions aim to encourage the working population to save more for retirement as early as possible to manage longevity risks," a spokesman for the Financial Services and the Treasury Bureau said.
Hong Kong : Inland Revenue and MPF Schemes Legislation (Tax Deductions for Annuity Premiums and MPF Voluntary Contributions) (Amendment) Bill 2018 gazetted
In order to address the longevity risks among the workers in the unorganised sector, and encourage them to voluntarily save for retirement, the government had started the Swavalamban Scheme in 2010-11.
Doubling of overdraft facility to micro insurance scheme - what pm Narendra Modi may announce in his independence day speech
But longevity risks present challenges of their own.
Appetite For Longevity? America's looming retirement crisis and mispriced longevity products present a "massive" growth opportunity for life reinsurers
The Modi government had launched APY in May 2015 to address the longevity risks among the workers in unorganised sector and to encourage the workers in unorganised sector to voluntarily save for their retirement last year.
Now, Aadhaar details mandatory for subscribing Atal Pension Yojana
Further, the strategy will primarily benefit middle income clients, as very high net worth clients likely have other options available to protect against longevity risks, and lower income clients may not have the resources available to annuitize.
The Build-A-Pension Trend
A: A lump sum window in which a group of participants not in pay status can elect during a specified window of time to receive payment of all of their plan benefits is one way to reduce a defined benefit plan's exposure to market and longevity risks. If done at the right time, this strategy can result in significant employer savings.
De-Risking Strategies
This approach has really resonated with my clientele as well as new prospects because it addresses market, inflation and longevity risks.
Customize annuity options with laddering: using annuities of different durations allows advisors to better adapt their senior clients' retirement plans to suit changing needs and risky environments
"People have no clue about longevity risks and withdrawal rates so they need help," said one.
Income planning as advisors see it
Germany-based automobile maker BMW has announced that it has offloaded its longevity risks in pensions to Germany-based Deutsche Bank (NYSE: DB).
BMW offloads longevity risk to Deutsche Bank
LONDON: German car maker BMW is set to announce a deal on Monday to offload 3 billion pounds ($4.62 billion) of longevity risks from its UK pension scheme to Deutsche Bank, the Financial Times reported.
BMW to offload UK pension liabilities to Deutsche
Bavarian Motor Works AG (BMW) (Xetra: BMW), a Germany-based automaker, is in discussion to offload GBP2.5bn of longevity risks from its United Kingdom pension scheme, according to the Financial Times.
BMW in talks to offload United Kingdom pension liabilities

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