Research On Effects Of Longevity Risk To Pension Solvency

As life expectancy increases, accumulated wealth of people during young is often insufficient to cover the expenses during old age. The insurance company annuities can satisfy the people’s pension needs, and solve personal financial resources shortages. At the same time, insurance companies have to bear the longevity risk from their own policyholders. Longevity risk is difficult to be fully cognitive, but also affect the solvency of the insurance company annuities.Many types of annuity products, but this article only insurance company annuity products as a research object, from the perspective of changes in mortality, incidental changes in interest rates due to resonance effects, study the impact on the insurance company annuity longevity risk solvency caused.Changes in mortality trends and fluctuations in interest rates will affect the role of pension solvency through two channels, one of which is itself an annuity factors, including pricing, dynamic break-even point, the provision of reserve; the other is the impact of insurance three sources of company profits annuity-death benefit poor, poor benefits spread benefits and costs. This article from the perspective of improving the mortality rate cuts, changes in pension solvency study, so do the mortality prediction is particularly important. From the mortality prediction results obtained, there is a big difference between mortality and actual mortality annuity product pricing used by insurance companies to. In this paper, Annuity model, introduced China Life annuity specific case data, respectively annuity premiums, insured annuities, annuities dynamic break-even point of the three aspects of the sensitivity of mortality were analyzed. The paper also analyzes the sensitivity of the premium, the amount and dynamic break-even point on the interest rate of the three aspects, as well as impact of changes in mortality resonance effects were studied.Through the empirical research we can draw the following conclusions:(1) With the improvement of the mortality rate, the insurance company annuity business premiums charged undervalued phenomenon exists. It is undervalued rate of about 10%. That is the assumption that the insurance company does not consider other operating costs. Net premium income should increase 10% to work with the insurance company’s debt balance.(2) Improved mortality cause insurance companies to pay the annuity business prolongation, and the appropriate insurance coverage increased about 9.2%.(3) The use of raw computing experience life annuity mortality table dynamic balance of the insured person aged about 70 years, when the mortality rate improved, approximately 69 years old.For each of the research findings, the choice of the path proposed corresponding, respectively, to produce nested in risk, risk response, risk dispersion of three phases. Insurance companies in the face of longevity risk, take measures to improve pension solvency, and ultimately the formation of a system solution. The first is the generation stage risk, the insurance company as pension managers, to achieve reasonable design policies, including appropriate premium increase or decrease the sum insured; followed by the response phase of risk, you can adjust the policy payment method, adjustment annuity products break-even point, or you can also take advantage of the young are now working to buy enough insurance coverage to pay premium annuity products have already expired, the formation of capital flows insurance company annuity funds pool. The last stage is the transfer of risk, the insurance company can take advantage of such bonds survival, survival swaps and other risk management tools, the transfer of longevity risk their own faces.