Can pension funds partially manage longevity risk by investing in a longevity megafund?

Artikel

Pension funds, which manage the financing of a large share of global retirement schemes, need to invest their assets in a diversified manner and over long durations while managing interest rate and longevity risks. In recent years, a new type of investment has emerged, that we call a longevity megafund, which invests in clinical trials for solutions against lifespan-limiting diseases and provides returns positively correlated with longevity. After describing ongoing biomedical developments against ageing-related diseases, we model the needed capital for pension funds to face longevity risk and find that it is far above current practices. After investigating the financial returns of pharmaceutical developments, we estimate the returns of a longevity megafund. Combined, our models indicate that investing in a longevity megafund is an appropriate method to significantly reduce longevity risk and the associated economic capital need.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Risks ; ISSN: 2227-9091 ; Volume: 6 ; Year: 2018 ; Issue: 3 ; Pages: 1-27 ; Basel: MDPI

Classification and Topics

• Classification: Wirtschaft
• Subject: longevity ; mortality ; longevity risk ; pension fund ; megafund ; biomedical ; biology of aging ; pharma ; model ; needed capital

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Debonneuil, Edouard ; Eyraud-Loisel, Anne ; Planchet, Frédéric
• Event: Veröffentlichung
• (who): MDPI
• (where): Basel
• (when): 2018

Further information

• DOI: doi:10.3390/risks6030067
• Handle: http://hdl.handle.net/10419/195855
• Last update: 10.03.2025, 11:44 AM CET