Media Longevity Heterogeneity and Pension Schemes

Longevity Heterogeneity and Pension Schemes

uploaded February 24, 2022 Views: 412 Comments: 0 Marked favorite: 0
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Many demographic studies have shown an important positive relationship between life expectancy and socio economic conditions. Shortly summarized, we could say that rich people live longer than poor people. The correlation can be observed, based on different indicators such as education level, wealth or level of income. The gap in terms of life expectancy is even widening and can go nowadays beyond 10 years. This reality has strange effects, especially on public pension schemes, paying lifetime annuities from retirement age. Indeed, social security systems are normally based on redistribution and solidarity principles. However, inequalities in terms of life expectancy generate regressive effects and induce indirect transfers from the poorest to the wealthiest affiliates. We could then apply different kinds of actuarial corrections on the pension design in order to compensate partially or totally this effect and restore some form of redistribution, as well in DB (Defined Benefit) as in DC (Defined Contribution) pension schemes.

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Categories: LIFE, PENSIONS
Content groups:  content2022

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