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Eric Le Bourg1

  • 1Centre de Recherches sur la Cognition Animale (CRCA), Cenre de Biologie Intégrative (CBI Toulouse), Université de Toulouse, CNRS, UPS, Toulouse, France. eric.le-bourg@univ-tlse3.fr.

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Summary

Official life expectancy forecasts for pension costs are often too optimistic. Recent demographic projections also overestimate life expectancy, failing to account for potential decreases due to health crises, impacting future pension funding.

Keywords:
ForecastsFranceJapanLife expectancy at birthPension costsUSA

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Area of Science:

  • Demography
  • Actuarial Science
  • Public Policy

Background:

  • Life expectancy at birth (e0) forecasts are critical for estimating future pension expenditures.
  • Previous official French forecasts have consistently overestimated life expectancy.
  • Recent demographic projections for several countries (France, Sweden, Japan, USA) also present higher e0 estimates than official figures.

Purpose of the Study:

  • To analyze the accuracy of life expectancy forecasts used for pension cost estimations.
  • To highlight the potential underestimation of pension liabilities due to overly optimistic life expectancy projections.
  • To emphasize the need for more realistic e0 forecasting models that incorporate potential mortality shocks.

Main Methods:

  • Comparative analysis of official versus recent demographic life expectancy forecasts.
  • Review of historical factors influencing life expectancy fluctuations (e.g., influenza, heatwaves).
  • Assessment of the impact of forecast inaccuracies on pension cost estimations.

Main Results:

  • Recent demographic forecasts, like official ones, tend to overestimate life expectancy at birth (e0).
  • These projections do not account for potential decreases in e0 caused by events like pandemics, heatwaves, or influenza outbreaks.
  • Overly optimistic e0 forecasts can lead governments to underestimate future pension fund requirements.

Conclusions:

  • Current life expectancy forecasting methods for pension planning may be flawed.
  • A more cautious approach is needed, acknowledging the possibility of e0 decline.
  • Accurate e0 forecasting is essential for the long-term financial sustainability of pension systems.