Longevity Risk-Sharing Programs Around the World

Sponsor

Society of Actuaries, Aging and Retirement Strategic Research Program

Summary

This report inventories and classifies longevity risk-sharing programs worldwide, examining how countries pool longevity risk to provide lifetime retirement income. It compares program structures, regulatory frameworks, guarantees, and design features, offering insights for policymakers, pension providers, insurers, and researchers.

Key Findings

1. The report identified 21 longevity risk-sharing programs operating or under development across Australia, Canada, Germany, Iceland, Netherlands, Singapore, Sweden, the United Kingdom, and the United States.
2. Longevity risk-sharing programs generally provide higher expected retirement income than traditional drawdown strategies because mortality credits are redistributed among survivors.
3. Most identified programs (19 of 20 analyzed) manage longevity risk through mutual participant risk-sharing rather than relying on external insurance guarantees.
4. Programs can be broadly classified into:
   • Mutual risk-sharing without smoothing
   • Mutual risk-sharing with solidarity reserves (CDC models)
   • Mutual risk-sharing with external guarantor assurance or insurance support.
5. Mandatory programs tend to achieve greater scale, lower administrative costs, and broader risk pooling than voluntary retail programs.
6. Voluntary programs often require more participant flexibility, including investment choice, death benefits, spouse protections, and exit options to attract members.
7. Collective Defined Contribution (CDC) arrangements are increasingly being adopted or considered in countries such as the Netherlands, Germany, Iceland, and the United Kingdom.
8. Singapore’s CPF LIFE represents a unique government-administered longevity risk-sharing model supported by state assurance rather than private insurance.
9. Disability and long-term care risk coverage are more common in European longevity risk-sharing arrangements than in many retail market products.
10. Academic and industry research increasingly support longevity risk-sharing as a viable alternative to traditional annuities and self-managed retirement drawdown strategies.
11. Effective communication, participant education, and clear disclosure of guarantees are critical to consumer adoption.
12. The report concludes that longevity risk-sharing programs can improve retirement income adequacy while reducing reliance on traditional insurance models and employer guarantees.

Key Components

• Executive Summary
• Introduction and Background
• An Inventory and Classification of Longevity Risk-Sharing Programs Worldwide
• Country-Level Analysis
• Cross-Country Comparative Analysis
• Related Studies
• Considerations
• Summary and Conclusions
• Acknowledgments
• Appendix and References

Acknowledgments

Project Oversight Group

• Mark Schemtob, FSA, MAAA, EA, MSPA
• Larry Pollack, FSA, MAAA, FCA
• Thomas Vicente, FSA, MAAA, EA, FCA
• David Cantor, ASA
• Grace Lattyak, FSA, MAAA, EA, FCA
• Grant Martin, FSA, CERA, EA, FCA
• Spencer Look, FSA, MAAA
• Shuai Jiang

Society of Actuaries Research Institute

• Steven Siegel, ASA, MAAA, Sr. Practice Research Actuary
• Barbara Scott, Sr. Research Administrator

External Reviewers and Contributors

• Jesús-Adrián Alvarez, EY, Denmark
• Richard Fullmer, CFA, Nuova Longevità Research, United States
• Yiwen Heng, Central Provident Fund Board, Singapore
• Pieter Hieber, Université de Lausanne, Switzerland
• Akio Hoshino, Waseda University, Japan
• Alexander Kling, ifa and Ulm University, Germany
• Estelle Liu, FIAA, CERA, AMP, Australia
• Moshe Milevsky, York University, Canada
• Barbara Sanders, FCIA, FSA, Simon Fraser University, Canada
• Giacomo Tarantolo, FIAA, CERA, Acenda Group, Australia