A pension provides regular income payments that you would receive for the rest of your life when you stop working--typically when people retire. A pension plan is a large pool of savings grows over time through contributions from workers or plan participants and their employer or plan sponsor. The plan assets are managed by professional investment managers, and most of the risks (such as investment risk) associated with managing plan assets will be assumed by the plan sponsor rather than plan participants. Particulars will vary from plan-to-plan. For example, there are variables such as how the money or contributions are set aside, who makes contributions, how the income is generated, when payments are made, the types of payments that are made, and how long pension payments last. The basic idea is that the longer you work the higher the payout. There may be tax breaks for pension contributions and there are limits on how much can go into a plan. Many pensions are payable to a surviving spouse on the death of the policyholder, and some pension payments are inflation-adjusted. The term pension is most often associated with defined benefit pension plans that provide regular, annuity-like payments to retirees. This is in contrast to defined contribution plans such as the 401k that shift most responsibilities onto employees and do not provide guaranteed lifetime income.

Aegon Offers Blueprint to Deal with U.K. Longevity Crisis

One of the world's largest financial services companies, Aegon , has released a "manifesto" that provides a blueprint for dealing with the longevity crisis in the United Kingdom. Aegon published its pension manifesto this week under the title: "The Pension Crunch: proposals for change."

Mark Iwry Seems to Appear Bullish on Longevity Annuities

Investment News reports that public officials met with retirement income industry executives at the MetLife benefits symposium in Washington. Part of the discussion focused on the use of annuities in defined contribution pension plans such as 401ks.

Demographics and Longevity Risk

The CFA Institute recently published an interview with Amlan Roy in the March/April issue of CFA Magazine. Amlan Roy is the head of global demographics and pension research at Credit Suisse in London.

Asset Liability Management for Personal Finance

A recent article the Journal of Portfolio Management argues that asset liability management is highly relevant and applicable to the field of personal finance, while traditional methods such as mean-variance optimization are not appropriate for private investors. Asset-liability management is a portfolio management technique that attempts to match the nature of duration of the assets and liabilities in the portfolio. For example, defined benefit pension fund managers or insurance company...

The World is Very Long on Longevity Risk

Longevity risk is clearly a huge growth market.  One has to wonder, though, where the capacity to address this market opportunity will come from.