Longevity bonds touted as pension funding option

Mervyn King, bank governor, has urged the government to make companies and pension providers aware they could use such bonds to hedge against the risk of pensioners living longer. That said, the Actuarial Profession warns such a move might put future generations of taxpayers at serious risk. Harvie Brown, president of the Faculty of Actuaries, suggests it would require the government to underwrite longevity risk. Brown says the new bonds might aid the market for life companies’ annuity products - where future demand is set to soar - however he cautions such bonds would also move the...