Abstract
The aging of China's population has become a significant social problem. The resulting longevity risk is a new and growing challenge for households, businesses and governments. This paper discusses the influence of longevity risk on different subjects and management methods by combining theoretical analysis and data analysis. From the perspective of households, based on the life cycle hypothesis, this paper demonstrates that the increase in life expectancy will reduce the total utility by reducing the average consumption level of individuals (families). For the general enterprises and the insurance industry, longevity risk means the rapid accumulation of future operating costs and may even bring liquidity risk. As for the government, they are the manager of the social pension fund, which is faced with the problem of balancing the income and payments under the background of the significant increase in the average life expectancy of the population. As a link, the financial market can transfer and disperse longevity risk among different subjects. However, there is a shortage of investors and issuers in the Chinese financial market. The rate of Chinese households participating financial market is low, and the progress of Longevity risk securitization in financial sectors is slow. Therefore, in managing longevity risk, China should focus on increasing the utilization of capital markets.
Published Version (
Free)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call