This article compares expected pension default losses of employees and retirees before and after pension buyouts. The comparisons are made using a stochastic model calibrated with market data. The employees remain in the defined benefit (DB) pension plan while the retirees become annuity holders...

Longevity risk is the risk that people on average will live longer than expected. That potential increase in life expectancy exposes corporations and pension funds to the risk of having insufficient funds to pay a more extended stream of annuity benefits. Buy-ins, buy-outs, and longevity bonds...