Sharing Longevity Risk: Why Governments Should Issue Longevity Bonds

Blake, D., Boardman, T. & Cairns, A. J. G. (2014). Sharing Longevity Risk: Why Governments Should Issue Longevity Bonds. North American Actuarial Journal, 18(1), pp. 258-277. doi: 10.1080/10920277.2014.883229

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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 systematic longevity risk. Longevity bonds will lead to a more secure pension savings market, together with a more efficient annuity market. By issuing longevity bonds, governments can aid the establishment of reliable longevity indices and key price points on the longevity risk term structure and help the emerging capital market in longevity-linked instruments to build on this term structure with liquid longevity derivatives.

Item Type: Article
Additional Information: This is an Accepted Manuscript of an article published by Taylor & Francis in North American Actuarial Journal on 17 Mar 2014, available online: http://wwww.tandfonline.com/10.1080/10920277.2014.883229
Uncontrolled Keywords: Longevity risk, longevity bonds, public policy, political economy
Subjects: H Social Sciences > HG Finance
Divisions: Cass Business School > Faculty of Finance
URI: http://openaccess.city.ac.uk/id/eprint/6842

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