Risk Management for China Pension Funds Based on the Longevity Swap

Along with the speeding up of aging, longevity risk has become one of the important factors that affect the sustainable development of China's basic endowment insurance system. In view of that the traditional methods can not implement the dispersion and transfer of longevity risk we take the method used on international of risk securitization in this paper and discuss how to manage the long-term retention longevity risk in China's pension system by longevity swap. In combination with the practical situation of China, the main work of this paper including the aspects below: design a trigger mechanism of longevity swap, provide the longevity swap's specific mode of operation and structure the longevity swap's pricing model. In the end, we analyze the existing difficulties in the progress of pushing longevity swaps in China and look forward to the development prospects of longevity swap in future.