Abstract

CRUZ-ARANDA, Fernando; CASTILLO RAMIREZ, Claudia Estrella  and  PEREZ FLORES, Citlalli. Financing of the Mexican pension system through longevity bonds. Rev. mex. econ. finanz [online]. 2018, vol.13, n.3, pp.387-417. ISSN 2448-6795.  https://doi.org/10.21919/remef.v13i3.303.

The objective of this work is to value and analyze the longevity bond that represents a long-term investment alternative to strengthen the pension funds of the Mexican population, that is, men and women who will reach 65 years of age. This presents an increase in life expectancy, risk of longevity, and a fall in the birth rate. Thus, the value of the zero-coupon bond is modeled through an equation that incorporates the estimated mortality rate at age x and time t, of each gender, with a projection of the mortality rate for 2040. The debt instrument is used to try and offset the probable losses that would be incurred by an insurance institution as consequence of the possible extension of the expected life of the insured and lower the probability of default of the corporate before them and providing them greater certainty; which contributes to this fund by providing access to the capital market and better social welfare to the retiree.

Keywords : C01; C13; C65; G12; G23; Pension system; population aging; longevity bond.

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