Media Income Related Mortality of Lithuanian Seniors in the Light of Covid-19

Income Related Mortality of Lithuanian Seniors in the Light of Covid-19

uploaded August 7, 2023 Views: 91 Comments: 0 Favorite: 0 CPD
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The main source of income in retirement in Lithuania is from the first pillar public system, since the second pillar is still not mature. Lithuania introduced quasi mandatory second pillar in 2004. Th second pillar is based on investments in individual accounts and participants who at retirement have accumulated the sum higher than the set threshold need to purchase pension annuity from Centralized Annuity Provider. Projected mortality level and interest rate are two main factors when pricing annuity. It is well known that income is one of mortality predictors other main predictors being age and gender. Since those retirees who are obliged to purchase annuity (annuitants) are wealthier individuals, they are supposed to live longer than average retired person. During the last couple of years mortality in Lithuania increased due to Covid-19 pandemics, however, the question is whether pandemics affected all individuals equally or were there differences in influence of mortality shock between more wealthy (potential annuitants) and less wealthy individuals. To make things more complicated, Centralized Annuity Provider started its activities in the mid 2020 when only first wave of pandemics was in force. This may lead to situations where increased number of deaths will be observed in accumulation stage, and annuities will be purchased almost exclusively by those who avoided lethal consequences of pandemics. In such case there will be almost null effect of mortality shock due to Covid-19 to activities of centralized annuity fund.

We analyse the mortality data of Lithuanian seniors who all receive pension benefits from the first pillar, and some of them who receive pension annuities from Centralized Annuity Provider. We compare income related mortality before Covid-19 and the in case of Covid-19 pandemics.

Find the Q&A here: Q&A on 'The Impact of COVID on Pension Arrangements'

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Categories: HEALTH, PENSIONS
Content groups:  content2023

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