The Path to a Lower-Risk Future
Prudential and Commonwealth Bank of Australia Team Up on New White Paper
Late in 2015, Commonwealth Bank and Prudential collaborated with King and Wood Mallesons and Mercer to present the first dedicated forum on pension de-risking in Australia. Longevity risk in the context of DB Superannuation is the potential for plan members to live longer than expected. The Australian population's life expectancy is increasing by one year, every seven years. Each year of increased life expectancy adds around 5% to a DB liability which needs to be funded by the plan sponsor, or in the government's case, the taxpayer. At a time when many Australian plans are poised to adopt a risk transfer strategy, this paper provides clarity and appreciation for the global markets approach to pension risk transfer and the hedging solutions that will be available to the Australian market.