Helping Long Term Care Coverage via Differential on Mortality?

Fernández-Ramos, M. Cristina; Esteban, Joseba Iñaki de la Peña; Herrera, Ana Teresa; Iturricastillo, Iván; Miguel, Noemí Peña

doi:10.1007/978-3-319-89824-7_62

Cited by 5 publications

(3 citation statements)

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“…This paper extends the model initially proposed by [46][47][48] obtaining complemented model to pay LTC needs for higher degrees of dependency. The initial assumption takes a defined benefit (DB) plan and the individual lacks information about his/her future health status.…”

Section: The Actuarial Modelmentioning

confidence: 68%

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Transforming Private Pensions: An Actuarial Model to Face Long-Term Costs

et al. 2022

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A common response in public pension systems to population ageing is to link pensions to observed longevity. This creates an automatic stabiliser that arises from the valuation of a private actuarially funded system. However, no private pension plan mechanism has been articulated to adapt to this ageing in relation to the increased costs it entails. Private pension plans focus on saving for retirement; capital is accumulated to pay for it. However, perceptions of health status change over time and, as retirement age approaches, concerns about long-term care (LTC) increase. Moreover, there is not enough time to plan for it sufficiently in advance. This paper proposes to incorporate a mechanism to add an allowance to the financial pension (retirement, disability, rotation) to cover LTC within a private defined benefit pension plan, in the case of a pensioner becoming dependent. Depending on a pensioner’s health status, both the expected number of payments and their intensity are transformed. For this purpose, a mechanism is defined (through Markov chains) to adapt the amount of LTC support to a beneficiary’s health-related life expectancy. The study’s main contribution is that it establishes a private pension plan model that offers to incorporate dependency aid through this mechanism into the economic pensions without increasing the total cost of the plan. It adapts to life expectancy according to a person’s state (healthy, disabled, dependent).

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Section: The Actuarial Modelmentioning

confidence: 68%

“…In Spain, the coverage for the highest levels of dependency is offered [61] either through insurance products or through pension plans. In fact, dependency coverage [62] was added as a contingency in a private pension plan and was exclusively for degrees of severe or high dependency [48,63].…”

Section: Dependency Degrees and Mortality Tablesmentioning

confidence: 99%

Transforming Private Pensions: An Actuarial Model to Face Long-Term Costs

et al. 2022

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“…Los sistemas de seguridad social establecen la cobertura de los gastos en LTC según el grado de severidad del dependiente, desde los más leves a los más severos, acorde el número y clase de actividades de la vida diaria que el individuo pueda realizar. En España, el sector privado oferta cobertura para los niveles más altos de dependencia (Fernández & De la Peña, 2013) bien a través de seguros, bien a través de los planes de pensiones (Ley PGE 17/2012, de 27 de diciembre), aunque solamente para los grados más graves (Fernández-Ramos et al, 2018;De la Peña et al 2021).…”

Section: Tablas De Mortalidadunclassified

El problema del superávit por dependencia en los planes de pensiones de empleo

Esteban

Martín

2022

Anales Del Instituto De Actuarios Españoles

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Resumen Dentro de los productos de previsión social complementaria se encuentran los planes de pensiones de empleo tanto de aportación como de prestación definida. Su finalidad es compensar al trabajador por jubilación, muerte, supervivencia o invalidez. Ni en la contratación ni a lo largo de la vida laboral se tiene en cuenta la situación de dependiente, que sí que repercute cuando el trabajador se convierte en beneficiario de una prestación. Si decide percibir una pensión periódica el capital correspondiente a la edad de jubilación se transforma en una renta vitalicia (en caso de aportación definida) o directamente comienza a percibir la renta vitalicia inicialmente determinada (prestación definida). En estos casos se calcula bajo una base técnica concreta que contempla una expectativa de mortalidad determinada. Sin embargo, hay experiencia internacional que evidencia que la mortalidad del dependiente es superior a la población general y asegurada, por lo que el dependiente, de percibir la misma pensión, la recibiría por menor plazo. El objetivo del presente trabajo es determinar el impacto económico que genera el cambio de estatus en el beneficiario cuando recibe esa renta vitalicia. Hay que subrayar que, en la renta vitalicia, el riesgo biométrico es asumido por el asegurador y que una menor esperanza de pago debido a que el beneficiario de la pensión pase al estado de dependiente conlleva un beneficio económico, pues esa ganancia no se reparte a la familia del beneficiario. Se crea un superávit al abonar la misma prestación. Así, el empleo de una adecuada asunción de mortalidad produce una reducción de la provisión matemática de pago, lo que redunda en liberar capital y tener un menor capital de solvencia requerido. Palabras clave: planes de pensiones, dependencia, prestación definida, matemática actuarial. Abstract Within the complementary social welfare products, we find both defined-contribution and defined-benefit employee pension plans. Their purpose is to compensate the worker for retirement, death, survival or disability. Dependence status is not taken into account either at the time of contracting or during working life, but it is taken into account when the worker becomes a benefit recipient. If the individual decides to receive a periodic pension, the capital sum at retirement age is converted into a life annuity (in the case of defined contribution) or the pension beneficiary starts receiving the initially determined life annuity directly (defined benefit). In these cases, it is calculated on a specific technical basis that takes into account a specific mortality expectancy. However, international experience shows that the mortality rate of the dependent is higher than that of the general and insured population, so that the dependent will receive the same pension for a longer period of time. The aim of this paper is to determine the economic impact of the change in the beneficiary’s status when receiving this annuity. It should be stressed that, in the life annuity, the biometric risk is assumed by the insurer and that a lower payment expectancy due to the pension beneficiary’s change to dependent status entails an economic benefit, as this gain is not distributed to the beneficiary’s family. A surplus is created by paying the same benefit. Thus, the use of an appropriate mortality assumption results in a reduction of the mathematical provision for payment, which frees up capital and results in a lower solvency capital requirement. Keywords: pension plans, long-term care, defined benefit, actuarial mathematics.

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