Longevity Risk from a Pension Fund Perspective

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Focusing on the challenges faced by assurance companies, the paper examines the critical risk factors in pricing annuity products, specifically interest risk and longevity risk. It explores various strategies for hedging interest risk through derivatives and long bonds, while highlighting the rarity of hedging options for longevity risk. The analysis emphasizes the necessity for insurers to consider longevity risk in their pricing strategies, providing insights into the complexities of the annuity market and the financial tools available to mitigate these risks.