Longevity risk, the risk that people will live longer than expected, weighs heavily on those who run pension schemes and on insurers that provide annuities. Hence the prediction of future mortality rates is an issue of fundamental importance for the insurance and pensions industry. Our analysis focuses on mortality at higher ages (65 – 95), given our interest in pension-related applications where the risk associated with longer-term cash flow is primarily linked to uncertainty in future rates of mortality. We use data on deaths and exposures for the Visegrad Group (V4) – the Czech Republic, Poland, Hungary and Slovakia from the Human Mortality Database (HMD). We have shown that if the today rate of increase will continue, it will at age 65 concluded (after calculation) to increase the present value of pension liabilities in defined-benefit schemes about 5% if we use cohort life table instead of period life table.
University of Pardubice, Faculty of Economics and Administration, Institute of Mathematics and Quantitative Methods, Studentská 84, 532 10 Pardubice, Czech Republic
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