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.
Myles Pink, partner in LCPs insurance de-risking team concludes: Given the uncertainty, pension schemes looking to hedge longevity risks
should assess insurer and reinsurer pricing against a range of underlying mortality assumptions when assessing value-for-money and should consider likely supply and demand pressures in the insurance and reinsurance markets when considering whether to remove longevity risk
at todays price.
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.
Property/casualty insurers and reinsurers use ILS to transfer risks off their books to capital market investors, while life insurers use ILS to transfer mortality and longevity risks
in much the same manner.
In "Managing Capital Market and Longevity Risks
in a Defined Benefit Pension Plan," Samuel Cox, Yijia Lin, Ruilin Tian, and Jifeng Yu propose a model for a defined benefit pension plan that minimizes total funding variation while controlling expected total pension cost and funding downside risk throughout the life of a pension cohort.
For instance, governments could improve the gathering of high-quality data available to price longevity risks
, encourage the dissemination of educational resources for consumers to better understand decumulation choices, improve the pool of financial instruments available to annuity providers for reducing and managing risks, and reduce regulatory barriers to a new and improved supply of decumulation products.
With regard to longevity risks
, there are several different tools that can be used to help reduce the chance prospects will outlive their assets.
Germany-based automobile maker BMW has announced that it has offloaded its longevity risks
in pensions to Germany-based Deutsche Bank (NYSE: DB).
62 billion) of longevity risks
from its UK pension scheme to Deutsche Bank, the Financial Times reported.
5bn of longevity risks
from its United Kingdom pension scheme, according to the Financial Times.
Annuities can address longevity risks
in all markets, but high income retirees should not be overlooked.
They remove the key interest rate, inflation and longevity risks
in a single transaction.