OECD to launch longevity risk project

Programme to include regulatory framework required to develop life tables for pension funds and insurance companies

The Organisation for Economic Co-operation and Development (OECD) plans to start its research on managing longevity risk in January, and could propose governments issue life expectancy indexes.

Pablo Antolin-Nicolas, principal economist of the financial affairs division at OECD told GP a working group would being researching in January with final policy recommendations due by 2012. He was speaking on the sidelines of the OECD-World Pensions Council (WPC) World Pensions & Investment Forum in Paris.

He said the research would look at the regulatory frameworks required to develop life tables for pension funds and insurance companies, an overview of how policy-makers currently handle longevity risk, a look at how to calculate longevity risk and will conclude with policy recommendations.

He said the first step in tackling longevity risk will be creating a life expectancy index.

"There are enough tools to start. We need an index so everybody agrees on a foundation for the market," he said. "We need to have an index that is recognisable and available for everybody to use."

At least one regulator is already moving to do just that.

In November, Per Plougmand Baertelsen, director of the pension and life insurance division at Finanstilsynet, the Danish Financial Supervisory Authority, said the regulator plans to issue new mortality benchmarks imminently. He said they would release a benchmark for observed mortality rates and one for expected future development in life expectancy. (Global Pensions; November 25, 2010)

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