12  Canadian Pensioners’ Mortality, Canadian Institute of Actuaries, Final Report, February 2014. www.ciaica.ca/docs/default-source/2014/214013e.pdf?sfvrsn=4. 13  Outside of Canada, some pension plans have transferred longevity risk to insurance companies, for example. 4  BIS central bankers’ speeches  A third challenge has been the introduction of fair-value accounting for pension promises and the interaction with regulatory solvency requirements.
The new accounting rules, which use the yield of AA corporate bonds to discount liabilities while valuing assets at current market prices, have led to an increase in balance sheet volatility. In response, many funds have attempted to “de-risk” their plans with higher allocations to long-term bonds, which provide a better hedge against the impact of interest rate fluctuations on their liabilities.