Sharing longevity risk: Why governments should issue longevity bonds

David Blake, Tom Boardman and Andrew Cairns

MPRA Paper from University Library of Munich, Germany

Abstract: Government-issued longevity bonds would allow longevity risk to be shared efficiently and fairly between generations. In exchange for paying a longevity risk premium, the current generation of retirees can look to future generations to hedge their aggregate longevity risk. There are also wider social benefits. Longevity bonds will lead to a more secure pension savings market - both defined contribution and defined benefit - together with a more efficient annuity market resulting in less means-tested benefits and a higher tax take. The emerging capital market in longevity-linked instruments can get help to kick start market participation through the establishment of reliable longevity indices and key price points on the longevity risk term structure and can build on this term structure with liquid longevity derivatives.

Keywords: Longevity Risk; Longevity Bonds; Public Policy; Political Economy (search for similar items in EconPapers)
JEL-codes: A20 G22 G23 G24 G28 H11 H63 J11 J18 (search for similar items in EconPapers)
Date: 2010-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Sharing Longevity Risk: Why Governments Should Issue Longevity Bonds (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:34184

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