Investigating the Sensitivity Effect of Actuarial Assumptions on Pension Liabilities in Malaysia

Ibrahim, Rose Irnawaty; Nordin, Norazmir Mohd; Chek, Mohd Zaki Awang

doi:10.21123/bsj.2021.18.1(suppl.).0830

Cited by 4 publications

(1 citation statement)

References 10 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…This is due to the circumstances where when the mortality rate decreases, pensioners are likely to have longer lives. This leads to an increment in benefit paid to the member while the contributions stay the same (Ibrahim et al, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

Mortality Trends and Its Impact on the Pension Liabilities

Ibrahim,

Hamzah,

Amran

2024

JAIT

View full text Add to dashboard Cite

Malaysia is forecasted to become an ageing nation by 2030. As this may reflect an improvement in the healthcare system, a lot of parties need to adapt to these changes immediately including the government, which is responsible for the wellbeing of the public sector employees by providing a defined-benefit scheme during their retirement. The study aims to perform big data processing and analyze Malaysian mortality trends by expanding the Malaysian Abridged Life Table for the past 20 years using the six-point Lagrangian interpolation method, which is a key machine learning algorithm used today. Apart from that, this study also aims to examine the impact of mortality changes on pension liabilities by using actuarial valuation methods, which is Projected Unit Credit (PUC) method. The sensitivity analysis will be conducted to observe the impact of the changes under five scenarios with four different ages at the time of valuation. Based on the empirical results, it was found that the Six-point Lagrangian interpolation method shows a satisfactory outcome as the error recorded is below 1 percent. The result shows that there is a decreasing pattern in the mortality rate for the past 20 years, which will eventually result in population ageing in Malaysia. Furthermore, the impact of reduced mortality rate on pension liabilities was also found to be significant. However, the impact can be mitigated by increasing the retirement age as life expectancy of the Malaysian population is believed to continue to increase due to ageing population.

show abstract

Section: Literature Reviewmentioning

confidence: 99%

Mortality Trends and Its Impact on the Pension Liabilities

Ibrahim,

Hamzah,

Amran

2024

JAIT

View full text Add to dashboard Cite

show abstract

Identifying appropriate actuarial indicators affecting long-term pension expenditures in Malaysia

Amran,

Ibrahim

2024

4th Symposium on Industrial Science and Technology (Sistec2022)

View full text Add to dashboard Cite

Econometric Analysis of Macroeconomic to Age‐Specific Mortality Rate in Malaysia: Evidence from Panel Data

Edrus

Siri

Haron

et al. 2022

Journal of Mathematics

View full text Add to dashboard Cite

Human mortality is unanticipated and unavoidable, particularly in light of the recent COVID-19 pandemic. Insurance companies, actuaries, financial institutions, demographers, and the government may suffer catastrophic losses as a result of imprecise mortality estimates. Understanding the factors that contribute to mortality at the population level can help the government improve its efforts to promote health and reduce health inequalities. Consequently, the present study utilizes an econometrics model to estimate Malaysia’s mortality rate, with macroeconomic factors as explanatory variables. The present study employed the unemployment rate, pension liabilities, gross domestic product, education expenditure, and healthcare expenditure as explanatory variables. The empirical results imply that the fixed effects model is feasible when using panel data across specific age groups. Moreover, the fixed effects model is devoid of cross-sectional dependency, heteroscedasticity, and serial correlation. The findings reveal that the unemployment rate, gross domestic product, and education expenditure all have a significant influence on the mortality rate. However, pension liabilities and health expenditure have an insignificant relationship with the mortality rate. The fixed effects model is demonstrated to be a robust model that fits the Malaysian scenario with an R-squared of approximately 84.69%. The present study is novel due to the fact that the model established between explanatory variables and the mortality rate shows a significant relationship, which can be helpful in forecasting the mortality at population level as a preparation for the post-COVID-19 mortality. The present study aims to contribute to the development of an effective support mechanism by rectifying Malaysia’s socioeconomic inequalities in order to mitigate the COVID-19 increase in mortality rate. Therefore, the Malaysian government is strongly encouraged to examine its expenditure on education and gross domestic product in order to improve the mortality rate, particularly among the adult and older population.

show abstract

Investigating the Sensitivity Effect of Actuarial Assumptions on Pension Liabilities in Malaysia

Cited by 4 publications

References 10 publications

Mortality Trends and Its Impact on the Pension Liabilities

Mortality Trends and Its Impact on the Pension Liabilities

Identifying appropriate actuarial indicators affecting long-term pension expenditures in Malaysia

Econometric Analysis of Macroeconomic to Age‐Specific Mortality Rate in Malaysia: Evidence from Panel Data

Contact Info

Product

Resources

About