Liquidity Coverage Ratio and Longevity: Difference between pages

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''Bank regulation''.
''Pensions''.  


(LCR).
A measure of the life expectancy of current and future pensioners and other beneficiaries of a pension scheme.


The LCR is a requirement under Basel III for a bank to hold high-quality liquid assets (HQLAs) sufficient to cover 100% of its net cash requirements over 30 days.  
From the perspective of the pensions provider, there is therefore a related 'longevity risk'.


This requirement has been implemented in stages from January 2015, to reach the 100% requirement by January 2019.  
Longevity risk refers to the increased cost of providing pensions, resulting from improvements in health and increases in average life expectancy.


A closely related term in pensions valuation and management is 'mortality'. 


It reduces the value to a bank of cash deposit of less than 30 days tenor because they are only worth the income on the HQLAs if a bank forecasts no short term cash receipts to cover repayment.  
Mortality refers to the relative proportions of groups of pension scheme members who are expected to die in a given period.


The purpose of this requirement is to ensure that banks can manage stressed market conditions, under which the bank is assumed to suffer substantial outflows of the cash previously deposited with it.
So as mortality rates decrease, average life expectancy increases accordingly.




== See also ==
== See also ==
* [[Basel III]]
* [[Mortality]]
* [[Net stable funding ratio]]
* [[Pension liabilities]]
* [[Cash investing in a new world]]
* [[Leverage ratio]]
* [[Liquidity buffer]]
* [[Liquidity risk]]
* [[LR]]
* [[Survival period]]
 
[[Category:Compliance_and_audit]]
[[Category:Liquidity_management]]

Revision as of 10:45, 22 August 2013

Pensions.

A measure of the life expectancy of current and future pensioners and other beneficiaries of a pension scheme.

From the perspective of the pensions provider, there is therefore a related 'longevity risk'.

Longevity risk refers to the increased cost of providing pensions, resulting from improvements in health and increases in average life expectancy.

A closely related term in pensions valuation and management is 'mortality'.

Mortality refers to the relative proportions of groups of pension scheme members who are expected to die in a given period.

So as mortality rates decrease, average life expectancy increases accordingly.


See also

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