%0 Report
%9 EIC working paper series
%A Frassi, Benedetta
%A Pammolli, Fabio
%A Regis, Luca
%D 2017
%F eprints:3628
%I IMT Institute for Advanced Studies Lucca
%K Keywords: longevity risk, mortality model, pension, retirement.   -    JEL Classification: C15, C32, J11, J26
%N 1
%T The potential costs of Longevity Risk on Public Pensions. Evidence from Italian data
%U http://eprints.imtlucca.it/3628/
%X In this article, we assess, through an empirical investigation based on Italian data, how  uncertainty regarding future mortality may affect public pension expenditure. Based  on a representative sample of Italian pensioners from 1985 to 2011, we find a consistent  underestimation of improvements seen in mortality and life expectancy when forecasts  are based on expectations. The pension expenditure estimated using realized mortality  rates is shown to be consistently higher than that obtained by using average forecasted  scenarios, produced with well-known stochastic mortality models. The paper highlights  the importance of considering the uncertainty regarding future pension benfits, i.e. of  evaluating and managing the longevity risk in public pension plans.