Products March 14, 2007

JP Morgan Releases Longevity Risk Index

JPMorgan has released its LifeMetrics Index, part of a LifeMetrics platform aimed at measuring and managing both longevity and mortality exposure.
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The Index is designed to benchmark and trade longevity risk and is calculated by an independent calculation agent. It will be governed by an international advisory committee including experts from different organizations.

The index incorporates historical and current statistics on mortality rates and life expectancy across genders, ages and nationalities. The index is available for the U.S., England and Wales.

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According to a press announcement, the new index is designed to create securities, derivatives and other structured products. LifeMetrics will enable pension plans to calibrate and hedge the risk associated with the longevity of their beneficiaries, the bank said.

The LifeMetrics platform, developed with advisers Watson Wyatt in the U.K. and U.S. and the Pensions Institute at Cass Business School, will also provide clients with a framework to manage longevity risk that includes analytics and software to model current exposure and forecast future exposure, the announcement said.

More information is available at www.jpmorgan.com/lifemetrics.

Data & Research March 13, 2007

Participants Prefer More Pay to Match Increase

More than half (58%) of workers participating in a 401(k) plan said they would like a salary increase over a higher employer matching contribution to the retirement plan.
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Contrarily, 42% would rather their employer increase the firm’s savings plan contribution, according to the latest Principal Financial Well-Being Index.

When it comes to workplace bonuses, the survey found many workers taking a somewhat fiscally disciplined approach to the cash infusion. As for where the added dollars went, respondents reported:
  • more than a third (36%) said that they paid down or paid off short-term debts,
  • more than one fourth (28%) said they used their bonus to purchase gifts during the holiday season; and
  • about a quarter (27%) said they saved or invested the bonus.

About three in 10 workers (31%) said they received a corporate bonus, compared to one in four (25%) in first quarter 2006.

When it comes to a tax refund, nearly half of workers (44%), but only 15% of retirees, say they will pay down or pay off short-term debts. A significant portion of both workers (43%) and retirees (41%) plan to save or invest the refund.

Against the backdrop of a strong economy, 65% of workers have already or expect to receive a raise from their employer in 2007 with 44% anticipating receiving a 3% to 4% increase, according to the survey.

Principal commissioned Harris Interactive to conduct online research with employees (ages 18+) of small and mid-sized U.S. businesses (firm size 10 – 1,000 employees) about their attitudes regarding their financial well being and their employee benefits. To compare responses, Harris Interactive also interviewed a group of retirees. Harris Interactive conducted the survey online among 1,181 employees and 536 retirees from January 24 through February 5, 2007.

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