A decline in life expectancy is having a chilling effect on a market that depends on insurers and pension funds spreading the risk of policyholders living longer. According to market participants there remains high interest in hedging among UK and other national pension schemes, although mortality improvement rate uncertainty and changes, and resulting pricing instability could be hindering market growth. So-called longevity-risk transfer companies are now being forced to cut their rates by as much as 50 percent because they cannot afford to pay for all those extra beneficiaries. The latest continuous mortality investigation suggests the chances of living to 65 have dropped 1.3% for men and 2% for women. " The pension scheme longevity market itself is in a state of flux", Aon Hewitt said, adding that if the data is wrong, the LRT market will be mispriced.
A decline in life expectancy is having a chilling effect on a market that depends on insurers and pension funds spreading the risk of policyholders living longer. So-called longevity-risk transfer companies are now being forced to cut their rates by as much as 50 percent because they cannot afford to pay for all those extra beneficiaries. The latest continuous mortality investigation suggests the chances of living to 65 have dropped 1.3% for men and 2% for women. " The pension scheme longevity market itself is in a state of flux", Aon Hewitt said, adding that if the data is wrong, the LRT market will be mispriced.