CHICAGO, September 29, 2016 - Rising liabilities linked to longevity, low rates and higher ongoing expenses are driving demand for pension risk transfer strategies around the world. Since 2007, thousands of companies have been able to implement pension risk transfer transactions, but in the current market, many companies struggle to make progress toward de-risking. Today, at the internationally renowned Longevity 12 conference, Prudential's Amy Kessler will discuss the pressing need for the retirement industry to continue to innovate to support the risk management needs of pension funds and insurers in our graying society. Kessler is senior vice president and head of Longevity Risk Transfer at Prudential Financial, Inc. (NYSE:PRU).
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Longevity 12 is the 12th International Longevity Risk and Capital Markets Solutions Conference attended by pension, insurance, capital markets and actuarial professionals together with leading academicians in the field.
Kessler’s 2015 paper, The Pension Risk Transfer Market at $260 Billion, discussed this trend to follow the de-risking path. The result has been more than $260 billion in pension liabilities transferred between 2007 and June, 2015. This number has increased another $20 billion in the past year.
More Innovation Ahead
“What we need in the market are more solutions for pension funds that are not yet on the road to a lower risk future whose progress has been impeded by today’s low rates,” said Kessler in advance of her address. “With a decade of innovation behind us, we see a lot more work to do. We need risk solutions for pension funds on the road to risk transfer and solutions for collective defined contribution schemes as well as adaptations to serve many more countries.”
In her address to delegates, Kessler will stress that with low interest rates and market volatility continuing unabated—and with pressure on the cost structure of pension funds rapidly increasing—innovation in the space needs to go further, and should include:
- solutions that help pension funds start on a path to de-risking even in today’s low- rate environment
- streamlined approaches to longevity risk transfer for smaller pension funds
- existing solutions (in use in the US, UK, Canada and the Netherlands) adapted for pension funds in Germany, Switzerland, Australia and the Nordics
- risk transfer solutions for collective defined contribution schemes
- sidecar solutions to bring alternative capital to insurers writing annuities, and
- retirement income solutions for individuals everywhere who are not covered by DB plans
Attendees at the event will have two opportunities to see Amy speak, her address from 4-4:30 pm today and later at a panel discussion on reinsurance sidecars from 5-5:30 pm.
About Prudential Retirement
Prudential Retirement delivers retirement plan solutions for public, private, and nonprofit organizations. Services include defined contribution, defined benefit and non-qualified deferred compensation record keeping, administrative services, investment management, comprehensive employee education and communications, and trustee services, as well as a variety of products and strategies, including institutional investment and income products, pension risk transfer solutions and structured settlement services. With more than 85 years of retirement experience, Prudential Retirement helps meet the needs of 4.1 million participants and annuitants. Prudential Retirement has $374.9 billion in retirement account values as of June 30, 2016. Retirement products and services are provided by Prudential Retirement Insurance and Annuity Company (PRIAC), Hartford, Conn., or its affiliates.
About Prudential Financial, Inc.
Prudential Financial, Inc. (NYSE:PRU), a financial services leader, has operations in the United States, Asia, Europe and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit www.news.prudential.com.