Bond ambition – The World Bank’s attempts to launch a longevity bond in Chile
Attempts to diversify longevity risk into the broader financial system have so far focused on using swaps. But in an ambitious move, the World Bank has tried to launch the first ever longevity bond in Chile. Aaron Woolner reports on how successful this was – and what the future holds for this type of instrument
Chile’s decision to create the world’s first fully privatised social security system in 1980 has seen it heralded as a template for other emerging economies. Indeed, in 2001, the then US president George Bush told the visiting Chilean president Ricardo Lagos that he “hoped to receive some suggestions” over how to modernise the US pension system.
Based on a system of individually funded accounts managed by private companies, known as Administradoras de Fondos de Pensiones, the Chilean pension
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