October 2020

29Oct

Life-Care Tontines

By Peter Hieber, Nathalie Lucas This paper builds on the advantage of pooling mortality and morbidity risks, and their inherent natural hedge. We focus on classical mutual risk pooling schemes, i.e. tontines, and introduce a ``life-care tontine", which in addition to retirement income targets the needs of long-term care coverage for an ageing population. This scheme reduces adverse selection costs and is actuarially fair at each time. Pooling heterogeneous risks (i.e. different age groups) is shown to reduce overall...

October 29, 2020
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23Oct

Reconsidering Risk Aversion

By Daniel J. Benjamin, Mark Alan Fontana, Miles S. Kimball Risk aversion is typically inferred from real or hypothetical choices over risky lotteries, but such “untutored” choices may reflect mistakes rather than preferences. We develop a procedure to disentangle preferences from mistakes: after eliciting untutored choices, we confront participants with their choices that are inconsistent with expected-utility axioms (broken down enough to be self-evident) and allow them to reconsider their choices. We demonstrate this procedure via a survey about...

October 23, 2020
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15Oct

5 retirement security risks that 2020 made worse

Retirement security was already on shaky ground when the calendar turned to January 1, ushering in a year of unprecedented and unexpected challenges that have compounded threats to global retirement security. According to Natixis Investment Managers’ 9th annual Global Retirement Index, the challenges of 2020 have disrupted financial markets, caused widespread unemployment and demanded urgent response from policy-makers, all of which could have long-reaching impacts on retirement security. The goal of the index is to provide an objective tool for...

October 15, 2020
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13Oct

UK. Risk settlement market could reach £50bn by end of 2020: Aon

Global insurance and reinsurance brokerage, Aon, predicts that the risk settlement market could still reach £50 billion by the end of 2020. The 2020 result for the risk settlement market, including both bulk annuities and longevity swaps, could make it a record year, despite the difficulties that have arisen from the COVID-19 pandemic. Whilst Aon’s risk settlement team has seen fluctuating levels of market activity during the past nine months, it expects to see a late surge in deal...

October 13, 2020
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September 2020

25Sep

UK. Scam warning signs found in half of post-Lockdown pension transfers

According to XPS, the pensions consultancy firm, in July and August of this year 51% of pension transfers, equating to twenty five million pounds in pension savings, were flagged as at risk of a pension scam. The number of transfers showing at least one red flag has dramatically increased during the COVID-19 pandemic. In 2016, only 13% of pensions’ transfers triggered a red flag. This figure rose to 33% at the end of June 2020 and then jumped considerably...

September 25, 2020
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24Sep

UK. Aon warns longevity risk has not gone away with COVID-19 deaths

Insurance and reinsurance broker and risk advisory Aon has warned today that re/insurers and pension funds need to avoid over-reacting to how inclusion of COVID-19 deaths changes recognised mortality models, saying that “longevity risk has not gone away.” Once excess deaths are added into the mortality models for the United Kingdom it may produce an unrealistic fall in life expectancy, Aon warns. Insurance and reinsurance companies, as well as pension schemes and funds, factor life expectancy into their calculations...

September 24, 2020
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23Sep

EU financial regulators asses risks to the financial sector after the outbreak of COVID-19 and call for enhanced cooperation

The impact of the crisis on EU banks’ asset quality is a key concern as significant uncertainty about the timing and size of a recovery persists. The ESAs see a risk of decoupling of financial market performance from the underlying economic activity, and , a prolonged lower for longer interest rate environment which is expected to weigh on the profitability and solvency of financial institutions, as well as contributing to the build-up of valuation risks. Directly following the COVID-19...

September 23, 2020
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11Sep

US. The crisis of multiemployer pension plans: Where do we go from here?

It is no secret that many multiemployer pension plans are struggling – paying out substantially more in benefits to retirees than the income they are receiving. Without legislative action, many are expected to go bankrupt in the next 5 to 15 years, leaving current retirees and active employees without the retirement income they expected. To understand where we go from here, let’s first explore the history of multiemployer plans, then look at potential avenues for reform. How...

September 11, 2020
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11Sep

UK:Workers ‘more at risk’ as they want to work past retirement date

A global retirement survey conducted in 15 countries by Aegon has revealed that workers in Britain could be exposed to lifestyle-changing financial risk later in life as a result of the COVID-19 pandemic. According to the survey, workers in the UK are less likely to want to retire earlier than planned but almost a third of them have no back-up plan in case they are unable to do so due to ill health. Only about 30% have a...

September 11, 2020
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11Sep

The use of technology and innovative approaches in disaster and risk management: a characterization of Caribbean countries’ experiences

The application of technologies, research, development, promotion of innovative approaches and local knowledge to confront complex issues posed by hazards are important components of managing disaster risks and guiding informed decision-making. Hence commitments to support and enhance access to technologies and to foster innovative approaches to risk reduction, preparedness and resilient recovery are essential requirements for the management of current and future disasters in the Caribbean subregion. Considering the importance of Disaster and Risk Management (DRM), the aim...

September 11, 2020
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