Social perception of the personal life expectancy and its impact on the formation of an attitude to the various pension plans

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Social perception of the personal life expectancy and its impact on the formation of an attitude to the various pension plans

Ганичев А.А., аспирант 1 курс, кафедра «Страхование и экономика социальной сферы» Финансовый университет при Правительстве РФ

Россия, г. Москва

Аннотация

retirement social perception

Статья посвящена реформе в сфере пенсионного накопительного обеспечения в России. Демонстрируется возрастающая роль института негосударственных пенсионных фондов и присущих им специфических рисков. Формулируются 3 гипотезы относительно влияния социального восприятия ожидаемой продолжительности жизни и его роль в выборе различных пенсионных планов. Проведен и проанализирован социальный опрос 153 респондентов относительно личного восприятия ожидаемой продолжительности жизни. Результаты исследования могут быть использованы при формировании маркетинговой стратегии негосударственными пенсионными фондами и страховщиками жизни.

Ключевые слова: пенсионная реформа, риск долголетия, страхование, риск-менеджмент, негосударственный пенсионный фонд, ожидаемая продолжительность жизни.

СОЦИАЛЬНОЕ ВОСПРИЯТИЕ ЛИЧНОЙ ПРОДОЛЖИТЕЛЬНОСТИ ЖИЗНИ И ЕГО ВЛИЯНИЕ НА ФОРМИРОВАНИЕ ОТНОШЕНИЯ К РАЗЛИЧНЫМ ПЕНСИОННЫМ ПЛАНАМ

Annotation

The article is devoted to the reform in the sphere of pension savings provision in Russia. Demonstrated the increasing role of the Institute ofnon- state pension funds and their specific risks. Formulated three basic hypotheses concerning the impact of social perception of life expectancy and its role in case of choosing among different pension plans. A social survey of 153 respondents was conducted and analyzed regarding a personal perception of life expectancy. The results of the study can be used in the formation of marketing strategy by non-state pension funds and life insurers.

Key words: pension reform, longevity risk, insurance, risk management, nonstate pension Fund, life expectancy.

The trend of an active population ageing influences many aspects of socioeconomic policy. In particular, the current reform of the funded pension in Russia. Conceptually, since 1990, there has been a gradual transition from a national solidary to a three-tier model of the pension system, which includes basic (social), labor (insurance) and non-state (accumulative) pensions. Obviously, in such conditions of modernization of the pension system, a significant role is assigned to non-state pension funds (hereinafter-NPF), which will provide a funded part of a pension.

The payment period is determined by the Federal state statistics service (hereinafter - Rosstat) based on formula 1 and is used only to define the amount of future monthly pension which is paid throughout the life of a client in case of lifetime type of pension plan. Thus, the size of the client's monthly pension is equal to the amount of savings in the pension account at the time of retirement divided by the number of months of life expectancy calculated by Rosstat. This scheme works only for lifetime pension plans (Defined Benefit). In case of choosing option of annuity type of pension provision (Fixed Annuity) monthly pension is equal to the amount of savings in the pension account at the time of retirement divided by the number of months in a contract (typically 120 months for Russian market).

where:

T-number of accrual months;

Si-number of men of retirement age;

Sj-number of women of retirement age;

ei - men's life expectancy of retirement age;

ej - women's life expectancy of retirement age.

It is noteworthy that, since NPF's services are by their nature a retail product designed for the mass consumer, the social attitudes towards the personal life expectancy period play a vital role in choosing type of pension plan and forming inner perception to longevity risk hedging costs. To manage that type of risk it is necessary to buy an insurance at client's expense that in turn could impro ve NPF's financial stability in terms of to fulfill its obligations in full and on time to the client.

To identify this influence was developed a social survey. Before conducting a research was made of 3 hypotheses:

1. If potential customers significantly underestimate their life expectancy regarding Rosstat's calculation, they will have a negative perception of the costs of hedging longevity risk from their own savings. Hence, pension plans with defined period of payments (Fixed Annuity) will be in demand;

2. If customer and Rosstat estimations are approximately the same for the number of months during which the funded part of the pension will be paid, the hedging costs will also be perceived negatively. Again, pension plans with defined period of payments (Fixed Annuity) will be in demand;

3. If clients believe that they will live much longer than the period predicted by Rosstat, the hedging costs will be perceived positively, as they will ensure the financial stability of the NPF, therefore, the client will not be left without a pension. Hence, lifetime pension (Defined Benefit) will be in demand.

To identify social attitudes to life expectancy, a survey was conducted among three age groups (20-24, 25-29, 30-46 years). The sample consists of students, colleagues and parents. It is worth to note that absolutely all participants could be attributed to the Lifestyle 1 type, because either the participants are trained in leading in Moscow and St. Petersburg Universities, or are engaged in intellectual activity in leading Russian and international companies (chart 1). Accordingly, in theory, the perception of their own life expectancy should be maximum, because as statistics shows, this type of potential clients has the longest life expectancy. The survey sample involved 153 people (20-24: 87 people, 25-29: 38 people, 30-46: 28 people).

Chart 1. Life expectancy for men aged 65 depending on lifestyle in the UK Source: Национальная статистическая служба Великобритании - Office for National Statistics (ONS)

Interestingly, the formula 1 has a lower bound of 168 months. Therefore, if the client wants to start receiving a funded pension from the age of 80, the amount of his savings will be divided by 168 months, and the amount received by the NPF will pay every month, ignoring the official data on life expectancy and interests of the client. It is set that in 2019 the number of months of accrual is 252 months (21 years). It means, according to Rosstat's estimation average predicted expectancy life in Russia is equal to 81 years for men and 76 years for women as a client can start receiving a funded pension since previously designated date of retirement. Curiously, the actual life expectancy is 72,7 years in 2017 which was announced by Rosstat. The aggregated averaged results of the social research survey are presented below:

Figure 1. Results of the survey «Estimation of personal life expectancy»

Analyzing the results obtained, obviously, all participants of the survey significantly underestimate their life expectancy relative to the Rosstat's estimation. It is worth to note that the smallest number of years of life was demonstrated by participants from the age group of 25-29 years. Possibly this was caused by certain physiological and immunological transformations. A human body begins to age about 20-25 years old in terms of the development of lymphocytes. Immune cells (lymphocytes) are designed to destroy various types of viruses, however, thymus gland, in which they fall from the bone marrow, develops only until puberty. Then, lymphocytes are formed less, respectively, the level of protection of the body is quite sharply reduced⁸. Such biological changes could have a significant negative impact on the perception of life expectancy.

Summing up, the social perception of the life expectancy of a particular individual undergoes significant changes depending on his age and is able to play a decisive role in the formation of the client's attitude to the personal costs of hedging longevity risk and to the choosing of pension plan specification. As social research shows the vast majority of potential clients underestimates their life expectancy period. It is a logical insight as according to NPF Sberbank more than 70% of customer base prefer to choose Fixed Annuity pension plans. Thus, NPFs and insurance companies should pay attention not only to the economic, legal, mathematical, statistical side of the issue, but also to the social attitudes of potential customers when developing their own retirement products and services for managing longevity risk.

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