Sharing Longevity Risk: Why Governments Should Issue Longevity Bonds

Blake, David P.; Boardman, Tom; Cairns, Andrew J. G.

doi:10.2139/ssrn.3612340

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Sharing Longevity Risk: Why Governments Should Issue Longevity Bonds

47 Pages Posted: 22 Jun 2020

See all articles by David P. Blake

Tom Boardman

City University London - The Business School

Andrew J. G. Cairns

Heriot-Watt University - Department of Actuarial Science & Statistics

There are 2 versions of this paper

Date Written: February 2013

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.

Keywords: Longevity risk, longevity bonds, public policy, political econom

JEL Classification: G22, G23, G24, G28, H11, H63, J11, J18

Suggested Citation: Suggested Citation

Blake, David P. and Boardman, Tom and Cairns, Andrew J. G., Sharing Longevity Risk: Why Governments Should Issue Longevity Bonds (February 2013). Available at SSRN: https://ssrn.com/abstract=3612340 or http://dx.doi.org/10.2139/ssrn.3612340