Space Cat wrote: ↑Tue Nov 05, 2019 2:38 pm
WTF with the 110 years life expectancy? Pure incompetency and self-inflicted disaster.
I think neither.
The fact that mortality tables go up to 110 years, doesn't mean that the life expectancy is 110 years. In fact other countries go much higher, i.e. 120 to 140 years (
https://www.emol.com/noticias/Economia/ ... -anos.html).
A mortality table is nothing more than the probability of survival for the next year as a function of age and sex (normally expressed as probability of death, also called qx) and in the case of Chile differentiating between "pensionados por vejez" and "pensionados por invalidez". It is well knows that over the past 120 years the world has seen consistent mortality improvement and Chile more so than most other countries. This has been incoporated by reducing the expected future mortality rate by a certain annual rate (called aax).
The details of the tables and the methodology behind it are described here:
http://www.cmfchile.cl/normativa/ncg_398_2015.pdf
I wasn't involved in the calculation of the Chilean tables. However, looking at the values, I would say the following:
- the mortality rates seem reasonable and in line with what I would have expected (also there is not much bias anybody can introduce either way)
- the mortality improvement rates seem a touch high, they also tend to be more subjective because they involve assessment of future medical improvements and life style (prevalence of smoking, fitness, nutrition etc), extrapolating historical improvement only works to a limited extent
May be this is a role for the state, i.e. provide private insurers with a longevity protection, so these can improve annuity rates (although the effect would probably only be 5-10%).
