Flexible retirement scheme for the Italian mortality experience

Many countries have set up Social Security Systems which link retirement age and/or pension benefits to life expectancy, considering a mechanism for indexing the retirement age and/or pension benefits. The issue is a subject of great interest in recent literature; the debate outlines new directions in pension scheme developments and presents experiences with flexible pension schemes from various countries. In this context, we consider an indexing mechanism based on the residual life expectancy to adjust the retirement age and keep a constant Expected Pension Period Duration (EPPD). The motivation is to focus on the recent and spread need to create flexible retirement schemes for facing global ageing and the prolonging working lives. We implement that approach referring to the classical Lee Carter Model (no cohort effect) and Haberman and Renshaw model considering the cohort effect. We assess the impact of the two mortality models for the Italian male and female populations. Keywords: Longevity risk, mortality projections, cohort effect.