Mortality-Indexed Annuities Managing Longevity Risk Via Product Design

Abstract

Longevity risk has become a major challenge for governments, individuals, and annuity providers in most countries. In its aggregate form, the systematic risk of changes to general mortality patterns, it has the potential for causing large cumulative losses for insurers. Since obvious risk management tools, such as (re)insurance or hedging, are less suited for managing an annuity provider’s exposure to this risk, we propose a type of life annuity with benefits contingent on actual mortality experience.

Similar adaptations to conventional product design exist with investment-linked annuities, and a role model for long-term contracts contingent on actual cost experience can be found in German private health insurance. By effectively sharing systematic longevity risk with policyholders, insurers may avoid cumulative losses.

Policyholders also gain in comparison with a comparable conventional annuity product: Using a Monte Carlo simulation, we identify a significant upside potential for policyholders while downside risk is limited.     

延长退休年龄对养老保险制度可持续性的影响分析

"未富先老"的基本国情以及制度本身存在的不完善严重影响到我国养老保险制度的可持续性.退休年龄作为一个极具潜力的内生变量,成为大多数国家缓解养老保险支付压力的共同选择.我国的退休政策经历了50年的风雨已不能适应社会发展的需要.借鉴国外经验,顺应生理寿命延长的需要,提高退休年龄将是一个必然的趋势.     

Policies on Managing Risk in Agricultural Markets

Over the past dozen years, policymakers have largely abandonedlong-standing popular approaches for addressing risk in agriculturewithout fully resolving the question of how best to manage thenegative consequences of volatile agricultural markets. Thearticle reviews the transition from past policies and describescurrent approaches that distinguish between the trade-relatedfiscal consequences of commodity market volatility and the consequencesof price and production risks for vulnerable rural householdsand communities. Current policies rely more heavily on markets,even though markets for risk are incomplete in numerous ways.The benefits and limitations of market-based instruments areexamined in the context of risk management strategies, and innovativeapproaches to extend the reach of risk markets are discussed.