Trends in the life expectancy of pensioners have a direct impact on pension expenditure. Attention to the long-term financial and actuarial balance of social security institutions and to the evolution of life expectancy - on the basis of which the same pension requirements and transformation coefficients envisaged in the main systems that adopt the contributory method are calculated - requires the availability of detailed analyzes on the lifespan trend of the specific collective recipients of pension benefits, to be added to the data on the general population already available from Istat.
Monitoring the phenomenon is therefore useful for pursuing the objective of controlling the balance between the life span implied in the services provided and the actual one. The assumptions mentioned led the bodies of the actuarial profession to reiterate the study started experimentally in 2008 (see ANIA-INPS-National Order of Actuaries) and repeated in a more structural way in 2012 (see National Order of Actuaries), in order to update the analyzes on the evolution of the mortality of pension and annuity recipients in Italy, and the scenarios on the future trends of their lifespan.
The new study consists of analyzes of data concerning the different types of annuity recipients disbursed by social security institutions (old age, disability and survivors). In particular:
– analysis of mortality and life span of recipients of old-age, survivors' and disability pensions disbursed in the period 1980–2012;
– analysis of the mortality differentials between the various groups analysed, of the effect of the amount of the annuity on life span, of the presence of specific trends for certain generations (“cohort effects”) and of the differences in the recipients of disability annuities, depending on the duration that has elapsed since the event that gave rise to the payment of the annuity;
– scenarios on the life span of old-age pensioners up to 2045.
In 2011, the last year made available by most of the entities, the positions observed amounted to 14,9 million (there were 11,4 million in 2009, the last year recorded in the previous study), for 190,4 billion euro (against 157,1 billion recorded in 2009 in the last edition of the study).
FIGURE 1 – AVERAGE MORTALITY RATES (LOGARITHMIC SCALE) AT VARIOUS AGES OF OLD-AGE PENSIONERS AND THE GENERAL POPULATION OVER THE OBSERVATION PERIOD – head analysis – males and females, %
FIGURE 2 – AVERAGE LIFESPAN AT 65 YEARS OF OLD-AGE PENSION RECEIVERS DURING THE OBSERVATION PERIOD
The following figures illustrate the average mortality ratios at various ages recorded in the observation period of the old-age annuity recipients and the life span at 65 of the individual groups of recipients, for the years made available by the respective institutions, according to the analysis “per heads”, i.e. based on the number of annuities eliminated due to death compared to annuities exposed to the same risk.
The old-age pensions recorded in 2011, the last year available, were 10,2 million, for 162,5 billion euros (they were less than 10 million for 142,7 billion euros in the previous study).
The following graphs highlight:
– life span values higher than those of the general population for all surveyed collectives;
– generalized increase in life span during the observation period, substantially in line with the trend shown by the general population.
In relation to the individual collectives of recipients, it is observed that:
– civil servants, doctors and lawyers have higher values than the general population;
– the self-employed remain above the population and below the collectives mentioned above;
– private employees show lower levels than the other collectives, although constantly higher than those of the general population.
Females register similarities with the data observed for males, with more erratic trends in the collectives in which the presence of female earners is more contained, however confirming a longer lifespan for civil servants and lower values, albeit higher than the population, for self-employed and private employees. Overall, considering the average ratio in the last ten years between mortality of old-age pensioners and that of the population, illustrated in the following figure, it is evident that:
– the differential is significant at the initial observed ages, for both sexes, to then gradually tend towards the mortality of the general population at advanced ages;
– the differential calculated taking into account, for recipients, the weighting for the amount of the annuity, i.e. calculating the mortality ratios as the ratio between the amounts of annuities eliminated due to death and the amounts of annuities exposed to the same risk, is greater for both sexes, with higher selection for the male.
FIGURE 3 – AVERAGE RATIO (LAST 10 YEARS) BETWEEN MORTALITY AT VARIOUS AGES OF OLD-AGE PENSION RECEIVERS AND
POPULATION
We then analysed, within the context of INPS collectives, the distinct life spans between old-age pensioners in the strict sense and seniority pensioners1. The following figure illustrates the values at 70 years of age, the age in which the distinction between the two types of pension is more consolidated: focusing on the last years observed, higher values are found for men for seniority pensioners, while for men female the life spans of old-age and seniority pensioners are broadly in line.
FIGURE 4 – LIFESPAN AT 70 YEARS OF OLD-AGE AND SENIORITY PENSIONERS 2000-2011
In the population and in the recipients of old-age pensions, the presence of a "cohort effect" was found, especially for males, i.e. a peculiar trend in mortality for certain generations compared to contiguous ones. In this regard, Fig. 5 illustrates the heat map of the variation rates of population mortality (left-hand graph), adjusted with the p-spline method, then compared (right-hand graph) with the values relating to pensioners, where the areas in yellow and red indicate a decrease in mortality, those in blue an increase in mortality. It is clear that the generations between 1930 and 1940 of the population, for example, show a more significant decrease in mortality in the years from 1980 onwards than the contiguous generations. A similar trend is confirmed, in the graph on the right, also by the mortality variation rates recorded for INPS pensioners from 1990 onwards, highlighted in the box.
FIGURE 5 – “HEAT MAP” OF THE ANNUAL CHANGE RATES OF THE MORTALITY RATE – MALE Left-hand graph: Mortality change rates of the general population 1962-2009 – ages 20-90 Right-hand graph: Left-hand graph integrated in the box by 1991-2012 rates relating to INPS pensioners – aged 60-100
The evidence, however, as already in the previous version of the study, supported the decision to use extrapolative models capable of incorporating this effect for the estimation of future trends in the mortality of old-age pensioners.
With regard to disability and survivors' annuities, the data is less numerous (in 2011 respectively 2,2 and 2,5 million units for 19,9 and 8,0 billion euros of annuities paid), and available for a smaller number years, although to a greater extent than in the previous study.
FIGURE 6 – AVERAGE DEATH RATES (LOGARITHMIC SCALE) OF DISABILITY AND SURVIVORS PENSION RECEIVERS AND POPULATION
Fig. 6 illustrates the trend of the average mortality rates observed for recipients of disability and survivors' pensions. For the former, as shown in the graph above, there is a significant difference in the early ages analysed, in terms of higher mortality, for both males and females.
Fig. 7 shows the duration of life at 65 years of recipients of disability and survivors' annuities in the observed period, where in this case the INAIL recipients are considered separately - given the specific nature of the recipients of the Institute's services.
Although the reported results are affected by a certain erratic nature, due to the low number of underlying data, they allow us to identify some trends.
For men, the life expectancy of recipients of disability and survivors' pensions is always below the levels reached in the period by the population; for females, on the other hand, in the last few years surveyed, life expectancy is substantially similar to that of the population, with the exception of recipients of disability pensions other than INAIL recipients, who show lower values.
FIGURE 7 – RECEIVERS OF SURVIVORS' PENSION AND DISABILITY: LIFESPAN AT 65 YEARS IN THE PERIOD 2001-2011 analysis by heads – males (left-hand graph) and females (right-hand graph)
With regard to the average mortality differential observed at various ages for recipients of disability pensions as a whole, the following figure illustrates the average selection recorded in the last ten years available. The over-mortality is evident, relevant in the initial observed ages, especially for females. At later ages, the differences in mortality decrease to substantially zero.
FIGURE 8 – AVERAGE RATIO (LAST 10 YEARS) BETWEEN MORTALITY OF DISABILITY PENSION RECEIVERS AND POPULATION
Still with reference to the recipients of disability pensions, the analysis, innovative compared to the previous versions of the study, on the mortality of the recipients as a function of the duration elapsed from the event that gave rise to the provision of the treatment should be underlined.
Regarding recipients for whom the disabling event has occurred for a limited period of time
– which it was decided to set at two years for convenience – mortality is higher than the other earners, i.e. those for whom the same event has occurred for more than two years (cf., in Fig. 9, the mortality for the groups of recipients distinguished by sex and by anti-duration of the disabling event, calculated in terms of average ratio with respect to the mortality of the population).
It should be noted that for recipients for whom the event occurred less than two years ago, mortality is significantly higher in correspondence with the first ages observed, to then converge on levels substantially similar to that of recipients for whom the event intervened for more than two years around the age of 65.
FIGURE 9 – AVERAGE RATIO (LAST 10 YEARS) BETWEEN MORTALITY OF PEOPLE INVALIDATED FOR 2 YEARS OR LESS (AND FOR MORE THAN 2 YEARS) AND POPULATION
Also for recipients of survivors' pensions, the average ratio of the average mortality observed in the last 10 years compared to that of the general population was determined (see Fig. 10).
FIGURE 10 – AVERAGE RATIO (LAST 10 YEARS) BETWEEN MORTALITY OF SURVIVORS' PENSION RECEIVERS AND POPULATION
The difference is significant at the initial observed ages, where the survivors record a higher mortality than that of the population, to then converge around the age of 80-85.
It was not possible, unlike the previous version of the study, to have significant data on the recipients of supplementary pensions or supplementary annuities.
The last part of the study concerns the scenarios developed on the possible future trends in mortality and life expectancy of old-age pension recipients up to 2045. The scenarios were developed on the most representative groups (INPS private employees, INPS self-employed and the total of the two), selected by virtue of the greater number, availability of historical data and regularity of the data collected. Two stochastic extrapolative models were used, already used in the previous version of the study, namely:
– the Lee-Carter model, integrated by the log-bilinear Poisson model;
– the Renshaw-Haberman model with cohort effect.
For both models, several scenarios have been elaborated, which characterizes stochastic models, in correspondence with several levels of likelihood. In particular, evidence is given to the central scenario, i.e. the one of maximum likelihood, to the "high" scenario - corresponding to a 5% percentile - and to the "low" scenario, corresponding to a 95% percentile.
FIGURE 11 – LIFESPAN AT 65 YEARS UNTIL 2045 – TOTAL OLD-AGE PENSION RECEIVERS
The previous figures summarize the results of the scenarios up to 2045 relating to the life span of 65 years of all INPS pension recipients (private and self-employed employees), compared with the scenarios developed by ISTAT. It is detected:
– confirmation of the prospective increase in the life expectancy of recipients of old-age pensions, with higher values than the general population;
– for males, who confirm life spans that tend to be shorter than females, values obtained with the Lee-Carter model are lower than those derived from the Renshaw-Haberman model, while for females the values obtained using the two models are closer .
The life span of recipients of old-age pensions is constantly greater than that resulting from the scenarios developed by ISTAT, confirming what was recorded in the observed period. It should also be emphasized that, with respect to the studies already carried out on pension recipients, it is noted that the slowdown in the rate of increase in life expectancy observed in recent years is reflected in increasingly less optimistic life expectancies (see the following figure).
FIGURE 12 – LIFESPAN AT 65 YEARS TO 2045 – COMPARISON WITH PREVIOUS STUDY
It will therefore be appropriate to verify in the coming years whether the further slowdown in the increase in average life expectancy, already known for the general population thanks to ISTAT data on 2015, will be reflected in the trends relating to pensioners, so as to also influence the prospects of the life span.
Finally, the scenarios illustrated can be taken into consideration as a benchmark for the other groups analysed, with the recommendation to take into account that it is plausible that the mortality differentials recorded in the observation period (see the following figure) may reflect, in whole or in part, in the prospective trend of the life span of specific collectives.
FIGURE 13 – AVERAGE RATIO (LAST 10 YEARS) BETWEEN MORTALITY OF SINGLE COLLECTIVE OLD-AGE PENSION RECEIVERS AND THE COLLECTIVES ADOPTED FOR THE DEVELOPMENT OF THE SCENARIOS
