Progressive Pension Formula and Life Expectancy Heterogeneity
An increasing number of empirical studies have shown a positive relationship between lifetime income and life expectancy at retirement. One’s income during the active part of one’s career translates into the amount of retirement benefits one might receive, leading to actuarial unfairness inside coho...
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| Format: | Article |
| Language: | English |
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MDPI AG
2021-07-01
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| Series: | Risks |
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| Online Access: | https://www.mdpi.com/2227-9091/9/7/127 |
| _version_ | 1797526134418571264 |
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| author | Keivan Diakite Pierre Devolder |
| author_facet | Keivan Diakite Pierre Devolder |
| author_sort | Keivan Diakite |
| collection | DOAJ |
| description | An increasing number of empirical studies have shown a positive relationship between lifetime income and life expectancy at retirement. One’s income during the active part of one’s career translates into the amount of retirement benefits one might receive, leading to actuarial unfairness inside cohorts of retirees. In order to discuss unfairness and sustainability issues, the Belgium pension reform committee issued a proposal for a point system designed to be both sustainable and adequate. In this paper, we use a similar defined benefit framework in order to set out a compensation mechanism linked to life expectancy heterogeneity during the active part of the career, aiming to reduce unfairness once reaching retirement. This method is based on the progressivity of pension benefit formulae. We implement these ideas in a simple demographic context in order to capture the constraints related to the model. |
| first_indexed | 2024-03-10T09:24:54Z |
| format | Article |
| id | doaj.art-a1c82d1c4ae1453e97fc304a540e3ab5 |
| institution | Directory Open Access Journal |
| issn | 2227-9091 |
| language | English |
| last_indexed | 2024-03-10T09:24:54Z |
| publishDate | 2021-07-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Risks |
| spelling | doaj.art-a1c82d1c4ae1453e97fc304a540e3ab52023-11-22T04:53:28ZengMDPI AGRisks2227-90912021-07-019712710.3390/risks9070127Progressive Pension Formula and Life Expectancy HeterogeneityKeivan Diakite0Pierre Devolder1Louvain Institute of Data Analysis and Modeling in Economics and Statistics, Université Catholique de Louvain, 1348 Ottignies-Louvain-la-Neuve, BelgiumLouvain Institute of Data Analysis and Modeling in Economics and Statistics, Université Catholique de Louvain, 1348 Ottignies-Louvain-la-Neuve, BelgiumAn increasing number of empirical studies have shown a positive relationship between lifetime income and life expectancy at retirement. One’s income during the active part of one’s career translates into the amount of retirement benefits one might receive, leading to actuarial unfairness inside cohorts of retirees. In order to discuss unfairness and sustainability issues, the Belgium pension reform committee issued a proposal for a point system designed to be both sustainable and adequate. In this paper, we use a similar defined benefit framework in order to set out a compensation mechanism linked to life expectancy heterogeneity during the active part of the career, aiming to reduce unfairness once reaching retirement. This method is based on the progressivity of pension benefit formulae. We implement these ideas in a simple demographic context in order to capture the constraints related to the model.https://www.mdpi.com/2227-9091/9/7/127heterogeneity in life expectancypension scheme designprogressivity |
| spellingShingle | Keivan Diakite Pierre Devolder Progressive Pension Formula and Life Expectancy Heterogeneity Risks heterogeneity in life expectancy pension scheme design progressivity |
| title | Progressive Pension Formula and Life Expectancy Heterogeneity |
| title_full | Progressive Pension Formula and Life Expectancy Heterogeneity |
| title_fullStr | Progressive Pension Formula and Life Expectancy Heterogeneity |
| title_full_unstemmed | Progressive Pension Formula and Life Expectancy Heterogeneity |
| title_short | Progressive Pension Formula and Life Expectancy Heterogeneity |
| title_sort | progressive pension formula and life expectancy heterogeneity |
| topic | heterogeneity in life expectancy pension scheme design progressivity |
| url | https://www.mdpi.com/2227-9091/9/7/127 |
| work_keys_str_mv | AT keivandiakite progressivepensionformulaandlifeexpectancyheterogeneity AT pierredevolder progressivepensionformulaandlifeexpectancyheterogeneity |