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Getting Life Expectancy Estimates Right for Pension Policy: Period versus Cohort Approach

1st Person: Ayuso, Mercedes
Additional Persons: Bravo, Jorge Miguel; Holzmann, Robert; Holzman, Robert
Type of Publication: Paper
Language: English
Published: Institute of Labor Economics (IZA) 2018
Series: CESifo Working Paper
Online: http://hdl.handle.net/10419/180530
id
oai_econstor.eu_10419-180530
recordtype
econstor
institution
MPG
collection
ECONSTOR
title
Getting Life Expectancy Estimates Right for Pension Policy: Period versus Cohort Approach
spellingShingle
Getting Life Expectancy Estimates Right for Pension Policy: Period versus Cohort Approach
Ayuso, Mercedes
CESifo Working Paper
title_short
Getting Life Expectancy Estimates Right for Pension Policy: Period versus Cohort Approach
title_full
Getting Life Expectancy Estimates Right for Pension Policy: Period versus Cohort Approach
title_fullStr
Getting Life Expectancy Estimates Right for Pension Policy: Period versus Cohort Approach
title_full_unstemmed
Getting Life Expectancy Estimates Right for Pension Policy: Period versus Cohort Approach
title_sort
Getting Life Expectancy Estimates Right for Pension Policy: Period versus Cohort Approach
format
electronic Article
format_phy_str_mv
Paper
publisher
Institute of Labor Economics (IZA)
publishDate
2018
language
English
author
Ayuso, Mercedes
author2
Bravo, Jorge Miguel
Holzmann, Robert
Holzman, Robert
author2Str
Bravo, Jorge Miguel
Holzmann, Robert
Holzman, Robert
description
In many policy areas it is essential to use the best estimates of life expectancy, but such estimates are vital to most areas of pension policy – from indexed access age and the calculation of initial benefits to the financial sustainability of pension schemes and the operation of their balancing mechanism. This paper presents the conceptual differences between static period and dynamic cohort mortality tables, estimates the differences in life expectancy between both tables using data from Portugal and Spain, and compares official estimates of both life expectancy estimates for Australia, the United Kingdom, and the United States for 1981, 2010 and 2060. This comparison reveals major differences between period and cohort life expectancy in and between countries and across years. Using measures of period instead of cohort life expectancy creates an implicit subsidy for individuals of 30 percent or more, with potentially stark consequences on the financial sustainability of pension schemes. These and other implications for pension policy are explored and next steps suggested.
url
http://hdl.handle.net/10419/180530
series
CESifo Working Paper
seriesStr
CESifo Working Paper
CESifo Working Paper
series2
CESifo Working Paper
series2_facet
CESifo Working Paper
up_date
2019-03-22T03:50:10.962Z
_version_
1628676181146468353

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