Financial Market Trends

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ISSN: 
1609-6886 (online)
ISSN: 
0378-651X (print)
http://dx.doi.org/10.1787/16096886
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OECD’s twice-yearly journal providing timely analyses and statistics on financial matters of topical interest and longer-term developments in specific financial sectors. Each issue provides a brief update of trends and prospects in the international and major domestic financial markets along with articles covering such topics as structural and regulatory developments in OECD financial systems, trends in foreign direct investment, trends in privatization, and financial sector statistics covering areas such as bank profitability, insurance, and institutional investors.

Periodically, a small number of articles within one field of financial sector developments – constituting the so-called special focus for the particular issue – may be included.

Article
 

Governments and the Market for Longevity-indexed Bonds You do not have access to this content

English
 
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    http://oecd.metastore.ingenta.com/content/2707011ec008.pdf
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Author(s):
Pablo Antolin, Hans J. Blommestein
11 July 2007
Pages:
28
Bibliographic information
No.:
8,
Volume:
2007,
Issue:
1
Pages:
153–175
http://dx.doi.org/10.1787/fmt-v2007-art8-en

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Uncertainty about length of life, longevity risk, is a growing financial problem for pension funds and annuity providers. Unfortunately, there is a lack of financial instruments to hedge against this longevity risk, thereby complicating risk management by pension funds and hindering the expansion of the annuity market. Consequently, this paper examines the role of government in promoting a private market solution for longevity hedging financial products. Governments could in principle improve the market for annuities by issuing longevity-indexed bonds and by producing a longevity index. The paper argues that the first public policy role is hampered by the fact that governments are themselves already exposed to significant longevity risk. However, governments could take other steps such as producing a reliable longevity index.
 
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