PensionsFirst Capital on how to best play the longevity game

The ultimate goal of many pension scheme sponsors and trustees is a full buyout, which allows them to transfer all of their pension liabilities over to an insurer. But with unfavourable market conditions making buyouts relatively more expensive, the longevity swap market is attracting interest as a means of reducing risk as a step on the journey towards the “end game”. However, Hugo James, CEO of PensionsFirst Capital, a subsidiary of pension risk management specialists, PensionsFirst Group, writes on Insurance ERM that finding the right deal requires transparency around the amount of risk that is being removed, as well as an appreciation of who is the ultimate recipient of the risk and the role of intermediaries in a longevity swap transaction.

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