PwC's Managing upstream risk: Regulatory reform review - An asian perspective December 2013 | Page 31

3.2 Pension Funds and Longevity

Risk
Update

The BIS Joint Forum released on 20 December
2013 its final report on Longevity risk transfer
markets: market structure, growth drivers
and impediments, and potential risks. Ageing
populations pose serious social policy and
regulatory/supervisory challenges in many
countries. Longevity risk - the risk of paying
out on pensions and annuities for longer than
anticipated - is significant when measured from
a financial perspective. The Joint Forum is
therefore publishing this forward-looking report
on longevity risk transfer markets that makes
a set of recommendations to policymakers and
supervisors:
• Communicate and cooperate: To reduce
the potential for regulatory arbitrage,
supervisors should communicate and
cooperate internationally and crosssectorally on longevity risk transfer.

The guidelines generally recommend that
NCAs should for instance ensure that insurance
intermediaries:
• Put in place a complaints management
policy and function, which enables them to
investigate complaints fairly;
• Make available to all relevant staff the
complaints management policy;
• Seek to gather and investigate all relevant
evidence and information regarding a
complaint;

• Understand longevity risk exposures:
Supervisors should seek to ensure
that holders of longevity risk under
their supervision have the appropriate
knowledge, skills, expertise and information
to manage it.
• Assess relevant policies: To inform their
policy towards longevity risk transfer
markets, policymakers should review their
explicit and implicit policies with regard to
where longevity risk should reside. They
should also be aware that social policies may
have consequences for both longevity risk
management practices and the functioning
of longevity risk transfer markets.

• Communicate in plain language, which is
clearly understood; and
• Provide a response without any unnecessary
delay.

Insurance | Regulatory Reform Review

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