risks is provided to the public, it is often in a form that is hard to assess. thinking carefully about communication is important to the level of public debate. the quantity of information is less relevant than its quality - sometimes less is more. and managing risk means making choices - collective choices - on the basis of a rational shared assessment of the risks involved. we cannot avoid uncertainty. so let us face up to it. the question of who should bear collective longevity risk has been discussed by blake and burrows ( 2001 ), blake ( 2003 ), dowd ( 2003 ), cox and lin ( 2004a, 2004b ), willets ( 2004 ), auerbach and hassett ( 2002 ) among others.

saying that, “ statistical thinking will one day be as necessary for efficient citizenship as the ability to read and write ”. and that is even more true today when we are inundated with statistics from every quarter. second, in order that public discussion can be framed in terms of risks, the public needs to receive accurate and objective information about the risks. transparency and honesty about risks should be an essential part of both the decision - making process and the explanation of decisions. i want to illustrate those two propositions by considering as an example public policy about pensions an issue, you might think, of particular interest to many of us in the academy. when the pensions commission reported in october, it highlighted the financing gap in our present system. but we must not lose sight of the equally important question of what are the risks incurred in pension provision and how should they be shared among us? it is not my intention to make any recommendations. that is for the pensions commission next year, and the government in its turn. but i do want to show that risk is at the heart of the issue. 2. the nature of risk “ in this world nothing can be said to be certain, except death and taxes ” wrote benjamin franklin in 1789. great man though franklin was, it is clear that there is indeed substantial uncertainty both about death, or at least its timing, and the contributions or taxes required to pay for our pensions. when thinking of how much to save for retirement, there are three main risks to consider. first, how much will we be earning in the future? second, what will be the rate of return on our savings? third, how long are we likely to live? tonight i shall focus exclusively on longevity risk - the uncertainty about how long we shall live - in order to focus on my two propositions about probabilistic thinking and public policy. 4 none of us know how long we shall live. but we can assess our chances by looking at the experience of others. a key distinction is between individual and collective risk. chart 1 plots the observed mortality rates at different ages for women in england and wales in 2002, the most recent year for which detailed data are available. ( a similar story can be told for men ). the most common age of death for women was 87, but many died at very different ages. mortality among individuals varies greatly - individual risk. but there is also significant uncertainty about the average length of life of a generation as a whole collective risk. longevity