Context: Recently, the International Financial Services Centres Authority (IFSCA) has constituted an Expert Committee to develop a Longevity Finance Hub in GIFT IFSC.
Key Highlights

• The committee is tasked to recommend approach towards development of Longevity Finance Hub and provide road map for the same.
• It is being co-chaired by Ms. Kaku Nakhate, President and Country Head (India), Bank of America, and Mr. Gopalan Srinivasan, Ex-CMD, New India Assurance Company Limited.
• It comprise of leaders from the entire longevity finance ecosystem including from areas such as banking, insurance, wealth management, FinTech, legal, compliance and management consultancy.

What has prompted for setting up of expert committee?

• It is estimated that by 2040, there will be more members of the silver generation than people under 20.
• This demographic change will throw open new challenges and opportunities especially in the areas of wealth management, health, insurance, and other investment products, the release added.
• This has prompted the IFSCA to set up an expert committee.

What Are Longevity Derivatives?

• They are a class of securities that provide a hedge for parties exposed to longevity risks through their businesses, such as pension plan managers and insurers.
• These derivatives are designed to deliver increasingly high payouts as a selected population group lives longer than originally expected or calculated.
• The derivatives are securities that derive their value from price fluctuations in an underlying asset or group of assets.
• They are designed to offer some protection against the risks by enabling investors to make money on the side from people living longer.

Additional Information
International Financial Services Centres(IFSC)

• An IFSC caters to customers outside the jurisdiction of the domestic economy. Such centers deal with flows of finance, financial products, and services across borders.
• GIFT (Gujarat International Finance Tec-City) located in Gandhinagar is India’s first International Financial Services Centre.