Every year, people live longer. That may sound nice, but it’s a big problem for the financial industry, especially pensions providers. Firms would love to be able to trade and hedge longevity risk, but there have been few practical solutions – until now. As Benjamin Beasley-Murray reports, interest in longevity derivatives has reached a crescendo this year, and in spite of considerable obstacles, a market looks more likely to emerge than it has ever done.
“In the long run we are all dead.” So wrote John Maynard Keynes in 1923, criticising economists who try to describe far-horizon events rather than grappling with the present.
But just how long is “the long run” in terms of your own lifespan? Because, like it or not, there is almost certainly a pension fund sponsor or annuity provider somewhere who hopes that for you it will be shorter rather than longer.
Try not to...