IMF warns: prolonging life is a risky business
Financial implications of longevity risk
At the same time, an increase in life expectancy is associated with financial costs for governments in the form of employee pension plans and social security mechanisms; for corporate employers who have pension programs with a fixed amount of benefits; for insurers who sell annuities; for individuals who do not have guaranteed pension payments.
The financial consequences of people living longer than expected (the so-called longevity risk) are very significant. If the average life expectancy increases by 2050 by 3 years more than currently expected, the already huge costs associated with the aging of the population will increase by 50 percent.
Currently, it makes sense to pay more attention to the risk of longevity due to the scale of its financial consequences and the fact that effective measures to minimize them will give results only in a few years. To neutralize the financial consequences of the risk of longevity, one or another combination of raising the retirement age (legislative or voluntary), increasing contributions to pension plans and reducing the amount of payments is necessary.
Governments need to: Recognize their exposure to longevity risk; to introduce methods to better distribute risk between governments, private sector pension sponsors and individuals; to promote the development of markets for the transfer of longevity risk; to provide more accurate information on the increase in life expectancy and explanations on pension finance.
Portal "Eternal youth" http://vechnayamolodost.ru16.04.2012