Getting life expectancy estimates right for pension policy: Period versus cohort approach

Mercedes Ayuso, Jorge Miguel Bravo, Robert Holzmann

Research output: Contribution to journalArticlepeer-review

17 Citations (Scopus)

Abstract

In many policy areas it is essential to use the best estimates of life expectancy, but it is vital to most areas of pension policy. This paper presents the conceptual differences between static period and dynamic cohort mortality tables, estimates the differences in life expectancy for 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. These comparisons reveal major differences between period and cohort life expectancy in and between countries and across years. The implications of using wrong estimates for pension policy, including financial sustainability, are explored.

Original languageEnglish
Pages (from-to)212-231
JournalJournal of Pension Economics and Finance
Volume20
Issue number2
Early online date13 May 2020
DOIs
Publication statusPublished - Apr 2021

Keywords

  • Balancing mechanism
  • cross-country comparison
  • Lee-Carter
  • life expectancy indexation

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