April 10, 2014 - April 11, 2014
Georgia State University
Longevity risk is the risk that realized future aggregate mortality trends exceed current assumptions. The concept first emerged in the mid 2000’s. It was triggered in part by the deterioration of funding levels of defined benefit pension plans following the burst of the dotcom bubble and a secular decline in interest rates.
The question of forecasting mortality trends initially engaged demographic researchers and epidemiologists. Subsequently, a considerable literature has formed in the risk management and insurance domain on corresponding models, methods, and mitigation strategies. This newer literature focuses primarily on the perspective of insurance companies and pension funds. Contemporaneously, economists have also taken an interest in the problem by considering how longevity risk affects individuals and society at large. However, these developments across fields have been mostly isolated from each other.