, they prefer something like the old fashioned pension through which the employees would receive guaranteed monthly payments for life. as we know, people now live longer due to improvement in healthcare, diet and exercise etc. at the same time, most if not all employers have withdrawn from offering life - long pension benefits because of the huge costs involved. moreover, the current low yield environment coupled with high volatility of the financial markets have also made it hard for any defined contribution pension plans to guarantee anything other than a rather low rate of return. 7. what the hkmc is doing is to offer a life annuity product to those aged 65 and above. the hkmc will guarantee an immediate fixed amount of monthly payout for each annuity policyholder. for a person at 65, with a hk $ 1 million premium, the monthly payment guaranteed for life is hk $ 5, 800 for male and hk $ 5, 300 for female, equivalent to an annuity rate of about 7 % for men and 6. 4 % for women. the reason that the hkmc can offer rather high annuity rates is because it will place the entire annuity premium received from policyholders with the hkma. the hkma will then invest the money alongside with the exchange fund portfolios, half in the public markets ( bonds and listed equities ) and half in private markets ( private equity and real estate ). as the hkma already has the investment capability and infrastructure for managing a portfolio as large as around hk $ 4 trillion, it would be easy to take on the additional investment generated by the hkmc ’ s annuity premium. the hkmc has now received around 10, 000 applications amounting to $ 5 billion in subscription. we are processing the applications and the exercise is expected to be completed soon. by end - october or early november this year, the first annuitants will be receiving their first monthly annuity payments. 8. let me do some quick maths here by using a married couple at the age of 65 who has joined both the reverse mortgage programme and the life annuity scheme. if the property they own is worth hk $ 5 million, ( which is the average value of the properties under the programme ), then they would get a monthly payment of $ 11, 000 plus the right of lifelong occupancy under the reverse mortgage programme. if they each subscribe for hk $ 1 million life annuity, then they will get another hk $ 11, 100 ( $ 5

weight to our general objective – which is to contribute to securing an appropriate degree of policyholder protection. now that sounds like rather a mouthful, but fortunately the bank ’ s independent evaluation office ( ieo ) has today published a thorough evaluation of the pra ’ s approach to its insurance objective. the bank set up the ieo in 2014 to help court evaluate the bank ’ s performance. early last year, court asked the ieo to consider whether we are doing enough of the right sorts of things to deliver the insurance objective. the ieo ’ s report includes a number of interesting findings, which i welcome and find consistent with my own observations from my time as executive director of insurance supervision. in particular, the ieo found that there is a lot of activity going on in pursuit of policyholder protection. this comes as no surprise to me. the pra ’ s insurance supervisors, actuaries and other professionals have in my http : / / www. bankofengland. co. uk / publications / documents / speeches / 2016 / speech877. pdf source : abi factsheet https : / / www. abi. org. uk / ~ / media / files / documents / publications / public / 2016 / keyfacts / abiukinsuranceandlongtermsavings - keyfacts. pdf as at 2016q2, based on insurers ’ reporting to the pra all speeches are available online at www. bankofengland. co. uk / speeches experience a strong public - service ethos. they are strongly motivated to protect insurance policyholders, which is for some a more human motivation than safety and soundness. however, the ieo found that we could do more to explain what we mean by “ policyholder protection ”. some of this is straightforward, such as ensuring staff have clear legal analysis and understand where and when the pra should and should not act, and we confirm in our response to the ieo ’ s report that we will improve that analysis and training where required. but the ieo also raises some deeper questions about how much protection the pra should seek to deliver, for which sorts of policyholders, and with what confidence. and it is those deeper questions that i intend to consider briefly in the remainder of my comments today. insurers are subject to what is known as “ twin peaks ” regulation in the uk. in addition to supervision from us in the pra, the financial conduct authority