Longevity Risk Management In The UK And Its Illumination To China

Ageing problem means that the proportion of old people in a nation has an increasing trade.The ageing problem brings many challenges,such as financial stress to pension schemes,labour shortage.Longevity risk is a financial risk which comes from the probability of the actual lifetime longer than the expected one.With an ageing population,longevity risk is the main risk facing by pension schemes.When having a glance overseas,the UK is outstanding because of her ability to handling pension crisis.The ageing problem in the UK came up after WII,where the time began pension reformation.In the past seven decades,the UK governments have never stopped the reformation of pension schemes in order to manage their longevity risks.Nowadays,although facing many problems,the UK pension schemes work effectively.The purpose of this article is to try to find illumination to pension schemes in China from the experience of the UK.This article firstly focuses on the denotation longevity risks and discuss longevity risk management in theory,then turns to the development of the UK pension schemes and try to summarize and compare the longevity risk management used in the UK experience.The next two part of this paper is illumination to China and a conclusion.The first chapter is an introduction,which talks about reasons why this topic is chosen and what other researches in this field have done.Also,a short summary is given to help readers to understand the organization of this article.The second chapter is longevity risks and its management,where the definition of longevity risk and reasons why we should focus on this risk are discussed.Also,the relationship between longevity risk and annuity,or more precisely pension,is told about.Finally,this chapter moves to the current theoretical management of longevity risks.The third chapter is an introduction to the development and current situation of the UK pension schemes.Firstly,a brief introduction to the current UK pension schemes is given,then a discussion of the development of the pension schemes in the UK from WII and of its current situation.The fourth chapter is the longevity risk and its management in the UK,where firstly studies the size of the longevity risks in the UK.Then,according to the discussion of pension scheme development in the third chapter,the longevity risk management in the UK experience is focused.The Fifth chapter is an empirical study of UK longevity risk management.Based on the discussion on the above chapter,using historical data,this chapter tries to figure out and compare the effectiveness of longevity risk management,such as raising the retirement age,stopping accept new member in DB schemes and transfer a DB pension scheme to a DC one.The sixth chapter is illumination to pension schemes in China and the final part of this article is a conclusion.This article tries to study theorical longevity risk management in a new way and to analyze the management experience in the UK in both historic and empirical views.