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Author/Editor:
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Kisser, Michael ; Kiff, John ; Oppers, Stefan E. ; Soto, Mauricio
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Publication Date:
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June 01, 2012
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Electronic Access:
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Free Full text
(PDF file size is 1,089KB).
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.
The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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Summary:
This paper provides the first empirical assessment of the impact of life expectancy assumptions on the liabilities of private U.S. defined benefit (DB) pension plans. Using detailed actuarial and financial information provided by the U.S. Department of Labor, we construct a longevity variable for each pension plan and then measure the impact of varying life expectancy assumptions across plans and over time on pension plan liabilities. The results indicate that each additional year of life expectancy increases pension liabilities by about 3 to 4 percent. This effect is not only statistically highly significant but also economically: each year of additional life expectancy would increase private U.S. DB pension plan liabilities by as much as $84 billion.
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Order a print copy
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Series:
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Working Paper No. 12/170
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Subject(s):
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Corporate sector | Economic models | Pensions | Private sector | United States
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Author's Keyword(s):
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Pension Plans | Longevity Risk | Life Expectancy | Mortality |
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