Early retirements

(Mar 25, 2009)

Members of defined-benefit pension schemes can often retire early if they are in poor health.  Unsurprisingly, such ill-health retirements exhibit higher mortality rates than those who retire at the normal scheme age.

Over time, however, the information on the health status of a pensioner is often lost.  When administrators are changed, for example, the original reason for retirement may not be migrated across onto the new payment system.  This poses a dilemma: we know that the reason for retirement will be a material risk factor, but we often won't know the reason codes for all pensioners.

One solution adopted by the CMI in the U.K. is to assume that everyone whose pension began before a certain age has retired…

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Tags: early retirement, missing data, Kaplan-Meier

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