Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



Historically, unexpected improvements in mortality rates have led to large, unanticipated increases in life expectancy, with accompanying increases in the value of defined benefit pension liabilities. As a result, longevity risk needs to be measured and managed alongside the financial risks facing these plans. The emergence of new instruments for hedging longevity risk means that a complete toolkit is now available for managing these plans in a way that is sustainable over the long term. Decisions to hedge or eliminate longevity risk need to be made in a holistic framework. For corporate pension plans this means taking account of the corporate finance perspective, as well as the interdependencies between the sponsor and the plan. This paper addresses the importance of measuring and managing longevity risk and presents a holistic framework for sustainable pension plan management that facilitates longevity risk management decision-making.


The published version of this Working Paper may be found in the 2014 publication: Recreating Sustainable Retirement: Resilience, Solvency, and Tail Risk.


Longevity Risk, Defined Benefit Pension Plans, Risk Management, Corporate Finance

Working Paper Number


Copyright/Permission Statement

All opinions, errors, findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council. © 2013 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

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Economics Commons



Date Posted: 26 June 2019