A particularly important issue in retirement income provision is longevity risk. There are two components to longevity risk. The first is the uncertainty over how long any particular pension scheme member is going to live after retirement. This is known as idiosyncratic longevity risk. Both...

This article reviews the economic theories of funded and unfunded pension systems and examines the advantages and disadvantages of each type of system; these theories help to explain the current interest in funded systems as well as the difficulties associated with the transition towards them

We show how nudges can be used both to encourage people to save enough to provide a decent standard of living in retirement and to draw down their accumulated pension fund to maximize retirement spending, without the risk of running out of money. Networks can help too, particularly...

For many pension schemes, a shortage of data limits their ability to use sophisticated stochastic mortality models to assess and manage their longevity risk. In this study, we develop a relative model for mortality, which compares the evolution of mortality rates in a sub-population with that...

Government-issued longevity bonds would allow longevity risk to be shared efficiently and fairly between generations. In exchange for paying a longevity risk premium, the current generation of retirees can look to future generations to hedge their systematic longevity risk. Longevity bonds will...

We use a case study of a pension plan wishing to hedge the longevity risk in its pension liabilities at a future date. The plan has the choice of using either a customised hedge or an index hedge, with the degree of hedge effectiveness being closely related to the correlation between the value...

The purpose of ‘Annuities and Accessibility' is very specific: to stimulate the debate in the defined contribution (DC) market with reference to the annuity purchase decision, which is and will remain the most common mechanism consumers use to convert a DC fund to an income stream in...

We portray the valuation of financial investments as mental time travel. In a series of thought investments, a $1 invested in an investment fund is projected forward in time and then discounted back to the present, both exponentially and hyperbolically. These thought investments feature...

Using a unique dataset that covers UK defined-benefit pension fund asset allocations over the past 25 years, we study the investment behavior of pensions funds. The results suggest that pension funds display strong herding behavior, and tend to herd in subgroups, moving in and out of different...

Two new methodologies are introduced to improve inference in the evaluation of mutual fund performance against benchmarks. First, the benchmark models are estimated using panel methods with both fund and time effects. Second, the non-normality of individual mutual fund returns is accounted for...