Posts Tagged ‘Longevity’

Neil Copeland

Interesting article in the FT about longevity swaps.

I find it slightly alarming that one of the drivers appears to be ” investment banks …  desperately hunting for new, high-margin businesses to replace the structured products and credit trading of the boom years.”

The article also adds that:

“One thing most agree on is that larger deals from very big pension schemes are better because there is more data on mortality and more diversity of lifestyles. However, the law of large numbers was also held up as a mark of safety for the securitisation of residential mortgages.”

Coupled with another FT report about the concerns of the Bank for International Settlements that there has been a  resurgence of the “excessive risk taking” by investment banks that sparked the financial crisis, it would seem clear that trustees and sponsoring employers need to ensure they fully understand the risks involved in such complex transactions.

As always, you can do a great deal worse than turn to Dilbert for a cogent analysis of the risks of relying on the law of large numbers!!

Brian Spence

Jagger & Associates excellent Investment Bulletin on longevity swaps continues with part 2.

Previously posted part 1 can be found here.

If you would like to consider this option or review any of your investment options contact Jagger & Associates, Actuaries & Investment Consultants on 0161 873 9350 or email enquiries@jaggerandassociates.co.uk.

Brian Spence is a founder of actuaries Spence & Partners Limited and a director of independent trustee Dalriada Trustees Limited.  You can follow him at @briandspence or @PensionsEndgame on Twitter or link to him on LinkedIn.  Dalriada provides professional trustee services and Spence & Partners can provide support to employers in appointing an independent trustee.  Brian has written a series of articles on appointing an independent trustee.

Follow @SpencePartners and @DalriadaTrustee on Twitter.

David Davison

A report from the European Commission has cited the UK, Ireland, Greece and Slovenia as the countries most needing to take action over the impact on their public finances of an ageing population. These countries are viewed as being exposed to greater risks as a result of very large projected increases in age-related expenditure such as state and public sector pensions. The report suggests raising the retirement age, reducing the accrual of future pension rights and removing incentives for early retirement as ways to begin to address the issues faced.

Brian Spence

Excellent feature in investment consultant Simon Jagger’s Investment Bulletin on longevity swaps.

This is part 1 so look out for part 2 next month.

If you would like to consider this option or review any of your investment options contact Jagger & Associates, Actuaries & Investment Consultants on 0161 873 9350 or email enquiries@jaggerandassociates.co.uk.

Brian Spence is a founder of actuaries Spence & Partners Limited and a director of independent trustee Dalriada Trustees Limited.  You can follow him at @briandspence or @PensionsEndgame on Twitter or link to him on LinkedIn.  Dalriada provides professional trustee services and Spence & Partners can provide support to employers in appointing an independent trustee.  Brian has written a series of articles on appointing an independent trustee.

Follow @SpencePartners and @DalriadaTrustee on Twitter.

David Davison

Thought it was interesting that Credit Suisse, an investment bank, is involved in the Babcock longevity swap. Given the sectors performance in relation to collateralised debt instruments (synthetic or otherwise) and credit default swaps (and you would think a bank might understand the risks associated with debt and credit default!) how confident are we that they understand the risks associated with longevity? (not an area banks have claimed expertise in the past).  No doubt they have very sophisticated financial models in place and everybody understands the detail behind the contract…… Read more »

David Davison

Apparently a 15 year old whizzkid from Germany has corrected NASA scientists on the probability of an asteroid called Apophis hitting earth. While NASA estimated a 1 in 45,000 chance, Nico Marquardt suggested 1 in 45, which NASA ultimately concluded to be right. Read more »

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