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Title:Longevity adjustment of pension benefits PDF Logo
Authors:Lassila, Jukka
Issue Date:2007
Series/Report no.:ETLA Discussion Papers, The Research Institute of the Finnish Economy (ETLA) 1073
Abstract:In anticipation of future gains in life expectancy, several countries have passed laws that automatically adjust pensions, if life expectancy changes. In this paper we study the effects of longevity adjustment under demographic uncertainty in Finland. If longevity increases, the adjustment decreases the contribution rate, and the reduction is bigger the higher the rate would have been without the reform. On the other hand, longevity adjustment increases the uncertainty in replacement rates. The current middle-aged generations, whose pensions are reduced more than contributions, are likely to experience the largest losses. The full gains are observed far in future. The quantitative results depend on, besides demographic realisations, the specifics of the pension system. Longevity adjustment significantly weakens the defined-benefit nature of the Finnish pension system and brings in a strong defined-contribution flavour.
Abstract (Translated):• How well do the academic resources, company R&D investments and research needs converge to help secure the future competitiveness of the Finnish forest industries?
Subjects:pensions, longevity, demographic uncertainty
JEL:H55
J11
Document Type:Working Paper
Appears in Collections:ETLA Discussion Papers, Research Institute of the Finnish Economy (ETLA)

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