May 2021
26May

Special Report: How to Ensure a Smooth Pension Risk Transfer

For employers, the number of reasons they should consider offloading some or all of their pension liabilities from their balance sheets seems to be growing every year. On average, beneficiaries are expected to live longer than they have in the past; generating returns to cover liabilities is becoming more challenging in a low interest rate environment; and premiums for the Pension Benefit Guaranty Corporation (PBGC) keep rising. Already, many plan sponsors are expected to power through deals this year. After...

May 26, 2021
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21May

US. Biden orders federal climate-risk financial strategy, with implications for homeowners, pensions and government contracts

President directs agencies to analyze and mitigate the risk climate change poses to the financial system, and he’ll use the findings in the budget process. President Joe Biden is mandating a federal government strategy to quantify climate-change risks to public and private financial assets. Banking, housing and agriculture regulators are among those who will be asked to use climate risk in their supervision of major industries, including the lending of federal funds and decisions on federal contracts. Some Department of Labor-regulated...

May 21, 2021
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04May

Surging Stocks Improve Pension Funding Levels, But De-Risking Isn’t at Risk

A strong stock market delivered the goods and then some for pension funding levels, both public and corporate, in the first quarter. But don’t expect companies to pull back from their campaign to shift into safer (if low-paying) bonds from stocks. That’s the conclusion from JPMorgan’s global market strategy team, which noted in a report that this development didn’t mean that corporate plans would ease up on their de-risking—that is, moving into bonds from stocks. Reason: Company defined benefit (DB)...

May 4, 2021
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April 2021
23Apr

Combining Flexible Asset Allocation, Sustainable Withdrawals, and Deferred Annuities to provide an Adaptive Lifelong Investing Solution

By Anran Chen, Steven Haberman, Steve Thomas In this paper, we integrate investment decisions in the post-retirement decumulation period with that of the deferred annuity purchase to provide a lifetime decumulation solution. Based on Monte Carlo simulation and historical experience, we use the Perfect Withdrawal Rate (PWR) as a tool to make recommendations on withdrawal rates and asset allocations for different levels of risk preferences. We have a few potentially important findings. First, we illustrate how cheap it is to...

April 23, 2021
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08Apr

Longevity Risk and Capital Markets: The 2019-20 Update

By David P. Blake, Andrew J. G. Cairns This Special Issue of the Insurance: Mathematics and Economics contains 16 contributions to the academic literature all dealing with longevity risk and capital markets. Draft versions of the papers were presented at Longevity 15: The Fifteenth International Longevity Risk and Capital Markets Solutions Conference that was held in Washington DC on 12-13 September 2019. It was hosted by the Pensions Institute at City, University of London. Longevity risk and related capital market solutions...

April 8, 2021
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01Apr

Understanding Social Insurance: Risk and Value Pluralism in the Early British Welfare State

By Rachel Friedman This article seeks to make two contributions to the understanding of social insurance, a central policy tool of the modern welfare state. Focusing on Britain, it locates an important strand of theoretical support for early social insurance programs in antecedent developments in mathematical probability and statistics. While by no means the only source of support for social insurance, it argues that these philosophical developments were among the preconditions for the emergence of welfare policies. In addition, understanding...

April 1, 2021
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March 2021
29Mar

US. Pension relief paves way for more de-risking

The $1.9 trillion American Rescue Plan Act signed by President Biden contains the most important changes in single employer pension funding relief rules since the introduction of the Pension Protection Act in 2006. What is changing? The new rules enforce two key changes in how minimum required contributions (MRCs) are calculated. Read also Retirees who pay the most in taxes make only $36,000 a year on average, study finds Firstly, the Act extends and enhances the Interest Rate Stabilization mechanisms brought in over the last decade (specifically, Moving...

March 29, 2021
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19Mar

UK. Pension longevity risk transfers reach record-breaking £55.8bn in 2020

Longevity risk transfers by UK pension schemes reached a record level of £55.8bn in 2020, rising above the £51.6bn completed the year before, analysis from LCP and Mercer has shown. Total buy-in and buyout volumes were £31.7bn, the second largest ever recorded in a single year but behind the £43.8bn bumper volumes racked up in 2019, with the record-breaking year instead being driven by longevity swaps reaching £24.1bn. Legal & General (L&G) had a 24 per cent market share, followed by...

March 19, 2021
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04Mar

Fraudsters prey on the fears of China’s aging population.

Shady retirement home and investment schemes have cheated China’s rapidly aging population out of hundreds of millions of dollars, spurring more than a thousand criminal cases in recent years. In a society that traditionally relied on family members to take care of elderly parents, fraudsters have been able to prey on fears that changing social norms and scarce resources will leave older people bereft, report Alexandra Stevenson and Cao Li for The New York Times. By 2025, more than 300 million...

March 4, 2021
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01Mar

UK. Pension risk settlements reached record high of over £54bn in 2020

The UK pension scheme risk settlement market hit a new record-high figure of over £54bn in 2020, and 2021 could be even bigger, according to analysis from Aon. The provider said it was possible to conclude that 2020 had broken the £52bn total achieved in 2019 now that all information on deals was available, while it cited “early indications” in its forecast that the new year could be worth even more. It also noted that the feat had been achieved despite...

March 1, 2021
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