The Life Expectancy Coefficient Affects the Pension Amount

The change in life expectancy affects starting pensions through the life expectancy coefficient. The purpose of the life expectancy coefficient is to limit the growth in pension expenditure due to the rising life expectancy and to contribute to prolonged working lives.

As the life expectancy increases, the life expectancy coefficient will reduce the amount of the monthly pension. However, it will not reduce the total amount of a pensioner’s pension during his or her time on an old-age pension, providing that the pensioner reaches the age of the increased life expectancy. The level of comparison is the life expectancy in 2009, for which the life expectancy coefficient was set at a value of one (1.00000).

Confirmed life expectancy coefficient for different cohorts

 Year of birth

 Life expectancy coefficient

 1947

1.00000

 1948

0.99170

 1949

0.98689

 1950

0.98351

 1951

 0.97914

 1952

 0.97552

 1953

0.97200

1954

 0.96800

 1955

0.96344

To ensure a pension level that equals the level unaffected by the life expectancy coefficient at the planned retirement age, the person retiring must work longer.

The life expectancy coefficient was included in the 2005 pension reform and applied for the first time to pensions starting in 2010. The life expectancy coefficient is determined for each birth year class at the age of 62 and will not change after the pension has started.

The extended life expectancy will also affect the pension amount in several other countries.

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