The Organisation for Economic Co-operation and Development (OECD) plans to start its research on managing longevity risk in 2011 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 begin researching this issue in January with final policy recommendations due by 2012.
He said the research will look at the regulatory frameworks required to develop life tables for pension funds and insurance companies. It will also provide an overview of how policy-makers currently handle longevity risk, 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. He said they would release a benchmark for observed mortality rates and one for expected development in life expectancy.
The Pensions Regulator (TPR) has set out plans to use "new regulatory initiatives" with over 1,000 schemes as it aims to tighten its regulatory grip and boost member outcomes.
HM Revenue and Customs (HMRC) has announced it is delaying the provision of data that will enable pension schemes to confirm the guaranteed minimum pension (GMP) benefits to pay to members until the end of the year.
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