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The 2015 FIAP International Seminar focused mainly on Longevity Insurance and Reverse Mortgages

1 October, 2015

Con rotundo éxito se desarrolló el XIII Seminario Internacional FIAP “Los Sistemas de Pensiones Multipilares: Invirtiendo en el Futuro“, el pasado 24 y 25 de septiembre de 2015, en Montevideo, Uruguay.

The 13th FIAP International Seminar “The Multipillar Pension Systems: Investing in the Future,” held in Montevideo, Uruguay, last September 24 and 25, 2015, was a huge success.

Outstanding speakers accompanied us on these two days, analyzing the lessons learnt and the recommendations arising from experiences with multipillar pension systems in different countries, including the so-called fourth pillar, and the discussion of proposals for increasing the expected returns and safety of investments in the long term and the pension amounts obtained by members.

Among the topics discussed at the seminar was the proposal regarding a Longevity Insurance for Latin America, presented by the prominent Economist, former Chilean Superintendent of Pensions and current Senior Specialist in Pensions of the Inter-American Development Bank (IDB), Solange Berstein. This insurance would be financed throughout the active life of members and would cover pensions after a certain advanced age, thus enabling coverage of the longevity risk in scheduled withdrawals, where this risk is not currently covered. By not diverting resources to higher survival or inheritance pensions, or reducing the cost of life annuities, this insurance also enables increasing pensions in general. The study commissioned by FIAP “The Role of a Longevity Insurance in Latin America: The cases of Chile, Colombia, Mexico and Peru,” (only the Spanish version available) explains this proposal in detail.

The importance of promoting the Voluntary Pension Savings pillars was also discussed during the seminar, with the presentation by Joseph Ramos, a leading economist and former Dean of the Faculty of Economics and Business of the University of Chile, of his study, also commissioned by FIAP “Reverse Mortgage (RM) as a 4th complementary pillar of the pension system“. The study proposes that in order to raise the incomes of those who are close to retirement, one of the possibilities is to complement the pension with income derived from transforming a high-value asset, housing, into a monthly income to complemented an individual’s pension. This is what is called a Reverse Mortgage, a financial instrument aimed at seniors, which enables converting a housing unit into a source of income, with the particularity that the owner retains the right of use and enjoyment of the unit. Thus, the instrument transforms an illiquid asset into a liquid asset, allowing the owner to continue living in his home until his death.

NEWSLETTER FIAP: 9

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