EconPapers    
Economics at your fingertips  
 

The mortality risk of pensions – methods of control and policy implications for the UK

Robert Hudson

Journal of Financial Regulation and Compliance, 2006, vol. 14, issue 4, 363-374

Abstract: Purpose - Bodies with responsibilities for paying pensions to individuals face a mortality risk in that the pensioners may prove longer lived than expected. The significant scale and uncertainity of this risk is becoming increasingly clear. Various measures are available to control this risk and new innovations such as mortality linked bonds and derivatives have been proposed. The purpose of this paper is to evaluate the alternative methods of controlling morality risk and discuss their potential policy implications. Design/methodology/approach - The paper considers the various parties affected by mortaling risk and assesses the difficulties of predicting mortality. Different methods of predicting mortality are discussed. Policy issues are considered and conclusions presented. Findings - There is a huge demand for methods of hedging and trading mortality risk. Financial markets are responding to this with a number of insurers moving into the bulk annuity market. New products, such as survivor bands and mortality derivatives, are just appearing in the market, it is still to be seen whether this major financial problem will be best be solved by the financial markets or by government intervention. Originality/value - The paper offers an evaluation of the alternative methods of controlling mortality risk together with the potential policy implications.

Keywords: Pensions; Life insurance; Life expectancy (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:13581980610711135

DOI: 10.1108/13581980610711135

Access Statistics for this article

Journal of Financial Regulation and Compliance is currently edited by Prof John Ashton

More articles in Journal of Financial Regulation and Compliance from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().

 
Page updated 2025-03-22
Handle: RePEc:eme:jfrcpp:13581980610711135