Risk management for investors

People started talking about longevity swaps years ago. And in theory, they looked like a winner. Given longer life expectancy in developed markets, longevity swaps looked like a good way to reduce exposures at pension schemes already struggling with widening deficits.

The big issue was price. Given the lack of liquidity in the market, the cost of executing a longevity swap made the product much too expensive for the vast majority of corporate pension schemes. Instead, buyouts and buy-ins became