• ISSN: 2010-023X (Print)
    • Abbreviated Title: Int. J. Trade, Economics and Financ.
    • Frequency: Bimonthly
    • DOI: 10.18178/IJTEF
    • Editor-in-Chief: Prof.Tung-Zong (Donald) Chang
    • Executive Editor: Ms. Cherry L. Chen
    • Abstracting/ Indexing:  ProQuest, Crossref, Electronic Journals Library , EBSCO, and Ulrich's Periodicals Directory
    • E-mail: ijtef@ejournal.net
IJTEF 2013 Vol.4(5): 247-251 ISSN: 2010-023X
DOI: 10.7763/IJTEF.2013.V4.295

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Study the Impact on Pension Liabilities as the Age of Retirement Increases

Rose Irnawaty Ibrahim and Zailan Siri
Abstract—Many proposals to solve the Government Pension Scheme’s financial problems have suggested that the retirement age should be increased because the life expectancies are much higher today. Obviously, we knew that the pension liabilities of the Government Pension Scheme will be decreased as the retirement age increases. The objective of the study is to evaluate the impact on the pension liabilities to the government as the age of retirement increases. The pension liabilities were estimated using the closed group approach by estimating the capitalised future lifetime costs as the age of retirement increases from 55 to 60 years in phases of one year with an option to retire earlier. In order to estimate the capitalised future lifetime costs, we have to estimate the expected number of pensioners who survive, become disabled or die during their waiting time by constructing the multiple-decrement table. The empirical data sets of government employees who retired at age 55 in Malaysia for period of 1991 to 2000 will be considered in the study. It was found that increasing the retirement age will give favorable implications of the Government Pension Scheme in the long term. As a suggestion, the Government Pension Scheme should consider increasing the retirement age in the future in order to reduce their costs.

Index Terms—Pension liabilities, closed group approach, capitalised future lifetime costs, multiple-decrement table.

R. I. Ibrahim is with the Faculty of Science and Technology, Universiti Sains Islam Malaysia, 71800 Bandar Baru Nilai, Negeri Sembilan, Malaysia (e-mail: rose.irnawaty@usim.edu.my). Z. Siri was with Institute of Mathematical Sciences, University of Malaya, 50603 Kuala Lumpur, Malaysia (e-mail: zailansiri@um.edu.my).


Cite:Rose Irnawaty Ibrahim and Zailan Siri, "Study the Impact on Pension Liabilities as the Age of Retirement Increases," International Journal of Trade, Economics and Finance vol.4, no.5, pp. 247-251, 2013.

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