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Currently showing: Funding longer lives > Longevity risk

16 Oct 13 07:14

Swiss Re's 150 Years Anniversary in Paris brought together more than 500 guests at l'Hôtel Salomon de Rothschild on 10 October. But the gathering was not just a celebration of this landmark moment in the company's history. It was also an opportunity for foster dialogue with clients, brokers and other stakeholders from across France's re/insurance industry through a panel discussion featuring a cross-disciplinary sample of experts discussing the financial and sociological aspects of Longevity.

The panel focused on a very practical question: How will we organize our lives and, more importantly, our societies with an increasing number of people living beyond the age of 65?

The lively discussion covered a series of aspects related to longevity -- from its philosophical to its economic implications. The panel's participants confronted two lines of thought: Living longer could be both a risk and an opportunity.

The risk is clearly that many governments do not have the financial resources to fund bigger retirement schemes. Our economic model needs to change to adapt to an older population. Working longer is one of the obvious solutions.
However, an ageing population also brings opportunities: This new "Silver economy" is likely to generate an immense new market for new and different products, such as housing for an older population.

"We see Longevity as extremely positive," said Swiss Re expert Christian Mumenthaler. "But it does pose some risks. These risks are also relevant for the insurance industry because if everyone lives longer, it often means that he/she hasn't put enough away for retirement." And who will fill that gap?

One way to address these many complex questions would be through an inter-disciplinary approach. Sociologist Serge Guérin for instance encouraged the audience and the other panel experts to think differently about ageing. Instead of discriminating against older people, employers should embrace the ageing workforce - along the lines of "Vive les vieux" or long live the old.

Additionally, philosopher Pierre-Henri Tavoillot asked the participants what does being "old" really means? Even within retirement we now have different life stages, or phases. The old perception of the three phases in life – childhood, adulthood and old age – is no longer a viable concept. "The world has fundamentally changed," he claimed.

As the longevity debate goes on, so do the options. Some ideas being shuffled include taking some time off -- "retire" for a certain amount of time before the official retirement age -- and work longer over the full span of our lives. The re/insurance industry could play a leading role in devising tailored products/solutions which could bridge a looming income gap.

What’s on your mind?

Category: Funding longer lives: Longevity risk, Pension/retirement, Social contract

Tags: #Swiss Re 150.


Rolf - 16 Oct 2013, 1:57 p.m.

Stefanie, you write about " beyond 65", using the number as the watermark for retirement from professional life, as it is fixed in many countries as the retirement age. Going through the blog, retirement in general seems to have been a discussion point. Which brings me to my point: historically, retirement is an achievement of the industrial age, of industrial societies. Before industrialisation, there was no such thing as retirement. You "worked" until you died. Although, the current clear separation we have in life between work and "non-work" (spare time) is another product of industrialisation. Before, there was no such clear separation between work and "non-work". So, you would think one could have easily lived working until death, as not your entire life was then dominated by work (well, it actually was for the vast majority given their status as tenant farmer or outright serf of a feudal lord, but that is another story). Anyway - what I am saying is that as our societies become post-industrial, the notion of retirement may no longer be so valid. From a practical point of view, our pension systems are still built on the industrial age premises of three phases in life, as Tavoillot describes it: childhood as school and learning for life; then, from 16 till 65, work, i.e., basically applying what you learned; then, with calendar accuracy, when you turn 65, stop working from one day to another (from 100 percent to zero percent), retiring, waiting for death. Retirement was seen, in a way, a reward for a hard life with hard work, getting your stressed out and powered out body (remember all this heat and smoke and carbon dust in factory plants back then, or the household chores of a housewife - no washing machine, no dishwasher, no anything) some respite, maybe an Indian summer before you eventually eclipsed. But when we office workers turn 65, we are usually not physically exhausted. When my father retired, he was physically tired, yes, but not worn out. So maybe retirement how we know it - or have learned to know it through the industrial age - may no longer be an appropriate concept for a post-industrial age, as we claim to be in. I think we already see some movement in this direction.

Matt Singleton - 18 Oct 2013, 12:01 p.m.

Indeed, the way we think of retirement will change a lot over the forthcoming years and decades. Retirement is often seen as 'attained' but it is also frequently 'ascribed'. This doesn't just affect manual workers too, in this fast-paced world, all too frequently mental illness is cited as something pushing people into an unplanned retirement.

We look too frequently at life in 'stages' and this is why the 'lifecourse' perspective is so much more effective - looking at the needs of generations, how people's lives are linked together and the independence of the individual can help us create a new way of looking at our old way of doing things. See for more info...

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