French Bank BNP Paribas is launching a new concept in institutional corporate bond investment which is designed to combat some of the problems pension funds have with investing in corporate bonds.
Called the longevity bond, the corporate investment bond is aimed at protecting UK pension funds against longevity risk but help UK pension funds to hedge their annuity liabilities and enable them to meet their pension promises. Working in conjunction with the European Investment Bank (EIB) as its issuer, and partnerRE as its risk analyst, the 25-year, £540m bond payout will be based on the longevity experience of the English and Welsh male population aged 65 and pays out an amount equal to the percentage of people still alive at that age. Future payouts will therefore decline over tim...
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