Overview of Heterogeneity in Longevity and Pension Schemes

Abstract

Reviews the empirical literature on longevity differences between individuals of different socioeconomic status (SES), considers their impact on lifetime pension benefits, discusses some broader economic implications, and considers some policy responses. Health and longevity remain among the most basic dimensions of human welfare. Unfortunately, in many countries in Europe, Latin America, and North America, individuals with higher SES tend to live longer and remain in better health than those with lower status, whether measuring SES by income, education, or occupation. Differences between high- and low-status groups sometimes prove as great as 10-14 years of life expectancy. Furthermore, these differences which have widened in recent decades remain the most urgent matter for policy intervention. However, they also have secondary consequences with regard to the actuarial fairness and progressivity or regressivity of public pensions, and private sector financial products like annuities and life insurance.